Canada’s Dollar Climbs as World Equities Snap Losing Streak

By Chris Fournier

Jan. 16 (Bloomberg) -- Canada’s dollar appreciated against its U.S. counterpart as global stocks rose, sending the MSCI World Index to its first gain in eight days.

“We’re seeing a correction taking place across the board with equity markets showing a little bit of stability,” said Ian Stannard, a currency strategist in London at BNP Paribas SA. “We’re seeing the commodity currencies able to regain some ground against the U.S. dollar. The Canadian dollar has been able to take advantage of that situation.”

The Canadian currency strengthened 1.1 percent to C$1.2377 per U.S. dollar at 7:52 a.m. in Toronto, from C$1.2527 yesterday. One Canadian dollar buys 80.80 U.S. cents.

The MSCI World, a benchmark index for 23 developed countries, rose 1.8 percent to 868.4 on speculation that fiscal stimulus packages in the U.S. and the U.K. may help alleviate some of the effects of the global economic slump.

Canada’s currency may appreciate to C$1.2240 “in the next few days,” Stannard said. “Equity markets seem to be responding quite favorably to the latest round of packages in the U.S., and also in the U.K. it looks highly likely we’ll get some further measures announced as well.”

To contact the reporter on this story: Chris Fournier in Montreal at cfournier3@bloomberg.net

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Brazilian Real Advances on Bank of America Government Bailout

By Adriana Brasileiro

Jan. 16 (Bloomberg) -- Brazil’s real rose after a $138 billion bailout for Bank of America Corp. raised speculation that government measures will preserve corporate profitability and help revive the credit market.

Bank of America today received an emergency package from the government to support its acquisition of Merrill Lynch & Co. and to prevent the global financial crisis from deepening. U.S. stock-index futures rose.

“This kind of news is positive for market sentiment and increases appetite for risk,” said Reginaldo Galhardo, currency trading manager at Treviso Corretora de Cambio in Sao Paulo.

The real gained for a second day, advancing 1.1 percent to 2.3279 per U.S. dollar at 7:15 a.m. New York time, from 2.3543 yesterday.

Yields on rate futures contracts fell after retail sales in Brazil increased at the slowest pace in 28 months, fueling calls for an interest-rate cut next week as growth in Latin America’s biggest economy slows.

Sales rose 5.1 percent in November, compared with a revised 9.8 percent gain in October, the national statistics agency IBGE said today in Rio de Janeiro. The increase was less than the 6 percent median forecast in a Bloomberg survey of 25 economists.

The yield on Brazil’s overnight futures contract for July fell eight basis points, or 0.08 percentage point, to 12.09 percent.

Central bankers will lower the benchmark overnight lending rate 75 basis points to 13 percent at their Jan. 21 policy meeting, according to the median estimate in a Bloomberg survey of 13 economists.

To contact the reporter on this story: Adriana Brasileiro in Rio de Janeiro at abrasileiro@bloomberg.net

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India Sugar Output to Miss Forecast as Yields Fall

By Pratik Parija

Jan. 16 (Bloomberg) -- India, the world’s second-biggest sugar maker, may produce 1.2 million tons less this year than forecast last month because of lower yields in the main cane growing state, likely tightening global supply.

Production in the year ending Sept. 30, 2009, may total 18 million metric tons, compared with 19.2 million tons forecast in December, S.L Jain, director general of the Indian Sugar Mills Association, said in an interview today.

Lower Indian output may widen a global deficit forecast at 5.8 million metric tons in the 2008-09 season by Czarnikow Group Ltd., supporting New York sugar prices that have risen 9 percent in the past three weeks. The South Asian country may permit duty- free imports of raw sugar to boost domestic supplies, Agriculture Minister Sharad Pawar said this week.

“This will have a positive impact on global prices as the shortage will lead to imports,” said Harish Galipelli, head of research at Karvy Comtrade in Hyderabad, a southern Indian city.

Raw-sugar futures for March delivery gained as much as 1.8 percent to 12.18 cents a pound in after-hours trading on ICE Futures U.S., the highest since Jan. 6. Sugar was the second- biggest gainer in 2008 on the Reuters/Jefferies CRB Index.

Sugar mills’ shares rose in Mumbai trading. Bajaj Hindusthan Ltd., India’s biggest sugar maker, gained 7.6 percent to 59.5 rupees, the most this year. Balarampur Chini Ltd., the second- biggest, added 7.9 percent to 54 rupees. Shree Renuka Sugars Ltd. climbed 8 percent to 71.95 rupees, the most since Dec. 12.

Buffer Stocks

Production may total 20 million tons in year to September, down from 26.4 million tons a year ago, Pawar said last month. Output may be 19.5 million tons, a group in Maharashtra, the second-biggest cane-growing state, said Jan. 6.

The South Asian nation will need to buy at least 3 million tons to maintain a “decent stockpile” at the end of the year, said Amol Tilak, an analyst at Kotak Commodity Services in Mumbai.

India hasn’t imported sugar in three years.

Sugar cane output may fall to 294.66 million tons in the year ending June, 14 percent less than last year, as farmers shifted to crops such as grains, the farm ministry has said.

In Uttar Pradesh, the nation’s biggest cane-growing state, farmers used Priponil, a pesticide, to increase the per hectare output, Jain said. The chemical instead lowered the sugar content in the cane, paring the recovery rate, he said.

“The pesticide had a negative impact on sugar accumulation and maturity of the crop due to hormonal effect,” he said.

To contact the reporters on this story: Pratik Parija in New Delhi at pparija@bloomberg.net.

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Gold Gains Most in a Week in London on Stocks, Weaker Dollar

By Nicholas Larkin

Jan. 16 (Bloomberg) -- Gold rose the most in a week in London as global stocks gained and the dollar weakened against the euro, increasing the metal’s appeal as an alternative investment.

Equities advanced after the U.S. government announced more plans to prop up the country’s ailing banking system and speculation grew that China will pass another stimulus package. European Central Bank President Jean-Claude Trichet yesterday indicated policy makers may leave borrowing costs unchanged in February after cutting rates to 2 percent, matching a record low.

Stock-market gains “have continued this morning,” which “reduces the need for investors to sell precious metals to cover lost assets,” Peter Fertig, a consultant for Dresdner Kleinwort, said by phone from Hainburg in Germany. Trichet’s comments support gold because another rate cut in February “would weigh on the euro,” he said.

Gold for immediate delivery climbed a second day, rising as much as $13.84, or 1.7 percent, to $831.64 an ounce and traded at $826.96 an ounce by 12:37 p.m. in London. February futures added $18.90, or 2.3 percent, to $826.20 in electronic trading on the Comex division of the New York Mercantile Exchange.

Still, bullion is heading for a 3.2 percent weekly loss in London as the dollar closes in on a 1.5 percent gain against the euro. The metal typically moves in the opposite direction to the U.S. currency. Gold rose to $824.25 an ounce in the morning “fixing” in London, used by some mining companies to sell production, from $810 at the afternoon fixing yesterday.

The dollar slipped as much as 1.5 percent against the euro today, while the MSCI World Index rallied 1.8 percent to 868.32.

Borrowing Costs

Policy makers from the U.S. to China have reduced borrowing costs aggressively in recent months to stimulate growth as the global recession worsens. Low real interest rates are “the most bullish environment for gold, as history would suggest this environment helped drive previous gold rallies,” Goldman Sachs Group Inc. said in a note today.

Reports later today will probably show core U.S. consumer prices, which exclude food and energy, rose 0.1 percent last month, while consumer confidence and industrial production weakened. The cost of living including food and energy likely fell 0.9 percent.

“Declining industrial production and sentiment has lately been supportive for gold,” as haven-buying increases, Fertig said. A slight increase in core prices “would not do too much harm for gold,” he said.

Gold in the SPDR Gold Trust, the largest exchange-traded fund backed by bullion, expanded by 0.6 percent to a record 795.25 tons, the company’s Web site shows. Investment in Zuercher Kantonalbank’s gold ETF also rose to a record last week.

Among other metals for immediate delivery in London, silver added 1.6 percent to $10.78 an ounce. Platinum gained $21, or 2.3 percent, to $946 an ounce, and palladium was 2.2 percent higher at $183.50 an ounce.

Silver held in Barclays Plc’s iShares Silver Trust, the biggest exchange-traded fund backed by the metal, rose by almost 80 metric tons to a record 7,143.3 tons on Jan. 14.

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

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Copper Advances in London on Decline in Stockpiles in China

By Claudia Carpenter

Jan. 16 (Bloomberg) -- Copper rose in London, trimming this week’s drop, as China’s biggest inventory slide in almost a year signaled declining supplies.

Copper inventories in warehouses monitored by the Shanghai Futures Exchange fell 30 percent to 15,871 metric tons in the week through yesterday, the biggest drop since Jan. 24. China is the world’s largest buyer of copper and some traders had expected purchases before China’s five-week Lunar New Year holiday that starts Jan. 26.

The inventory drop is “bullish,” said Stephen Briggs, an analyst at RBS Global Banking and Markets in London. “Prices went up overnight because Shanghai stocks were expected to be down.”

Copper for delivery in three months gained $91, or 2.8 percent, to $3,371 a ton as of 9:02 a.m. on the London Metal Exchange, heading for a 0.9 percent weekly drop. The contract rose 5.2 percent last week.

Aluminum gained $2 to $1,482 a ton. About half of the aluminum industry is producing metal at a cash operating loss, and “major closure announcements will be made in coming weeks,” Sanford C. Bernstein Ltd. analyst Andrew Keen in London wrote in a report today.

Lead advanced $4.50 to $1,158.50 a ton, nickel increased $180 to $10,875 a ton and zinc jumped $13.50 to $1,276. Tin declined $5 to $11,000 a ton.

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

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Oil Set for Biggest Weekly Drop in Month as IEA Cuts Forecast

By Alexander Kwiatkowski

Jan. 16 (Bloomberg) -- Crude oil fell, set for the biggest weekly decline in a month, after the International Energy Agency said demand will fall for a second year, the first back-to-back contraction since 1983.

The adviser to 28 nations cut its 2009 forecast by 1 million barrels a day on expectations the International Monetary Fund will lower its economic growth outlook. The IEA estimates global consumption will shrink 0.6 percent to 85.3 million barrels a day.

“Global oil demand is still reducing at an alarming rate,” said Rob Laughlin, senior broker at MF Global Ltd. in London. “This latest report from the IEA is another warning shot across the bows of OPEC that supply is still outpacing demand and the situation is getting worse.”

Crude oil for February delivery traded down 26 cents at $35.14 a barrel on the New York Mercantile Exchange at 12:39 a.m. London time.

The contract expires on Jan. 20. Yesterday, futures dropped 5 percent to $35.40 a barrel, the lowest settlement since Dec. 24. Prices have fallen 13 percent this week and declined 20 percent this year.

The more-active March contract was at $42.99 a barrel, down 59 cents, at 12:39 a.m. in London.

The Organization of Petroleum Exporting Countries yesterday shaved its global demand estimate for 2009 by 20,000 barrels to 85.66 million barrels a day. That brings this year’s reduction to 180,000 barrels a day, or 0.2 percent.

Brent Crude

Brent crude oil for March settlement was at $44.48 a barrel, down 20 cents, at 12:40 a.m. local time on London’s ICE Futures Europe exchange. The February contract expired yesterday at $44.69 a barrel.

Crude-oil inventories at Cushing, Oklahoma, where West Texas Intermediate traded on the Nymex is stored, climbed 2.5 percent to 33 million barrels last week, the Energy Department said this week. It was the highest since at least April 2004, when the department began keeping records for the location.

U.S. fuel demand fell 6 percent last year, the biggest drop since 1980, as prices touched records and the economy contracted, the industry-funded American Petroleum Institute said yesterday.

U.S. crude stockpiles increased 1.14 million barrels to 326.6 million barrels last week, the highest since Aug. 31, 2007, the Energy Department said Jan. 14. Gasoline and distillate fuel supplies also rose.

Oil may fall further next week as traders try to profit from the price differentials between the prompt New York crude future and later months and store more supplies.

Seventeen of 35 analysts surveyed by Bloomberg News, or 49 percent, said futures will decline through Jan. 23. Twelve respondents, or 34 percent, forecast oil will increase and six said there will be little change. Last week, 41 percent of analysts expected a gain in prices.

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

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German Stocks Snap Seven-Day Loss; Deutsche Bank, Infineon Gain

By Stefanie Haxel

Jan. 16 (Bloomberg) -- German stocks advanced for the first time in eight days as investors speculated the U.S. government’s $20 billion investment in Bank of America Corp. will help stabilize the financial system.

Allianz SE, Germany’s largest insurer, and Deutsche Postbank AG, rose at least 3 percent. Infineon Technologies AG, Europe’s second-largest maker of semiconductors, advanced 6.6 percent as Intel Corp. of the U.S. said profitability may rebound after the first quarter, when customers finish working through excess supplies.

The benchmark DAX Index added 2.5 percent to 4,443.64 as of 12:28 p.m. in Frankfurt, trimming the weekly decline to 7.1 percent. DAX futures expiring in March increased 2.6 percent. The broader HDAX advanced 2.4 percent.

“The aid for Bank of America is reassuring the market,” said Robert Halver, head of research at Baader Bank in Frankfurt. “Banks are key for the global recovery. The move shows governments will continue to provide support if necessary.”

The U.S. government also guaranteed $118 billion of Bank of America’s assets to support its acquisition of Merrill Lynch & Co. The emergency lifeline is “part of its commitment to support financial-market stability,” the Treasury Department, Federal Reserve and Federal Deposit Insurance Corp. said.

Stocks pared some gains after Citigroup Inc. posted a $8.29 billion fourth-quarter loss and Bank of America cut its quarterly dividend to 1 cent a share from 32 cents.

The DAX Index has tumbled 45 percent since the beginning of last year as credit losses and writedowns topped $1 trillion in the worst financial crisis since the Great Depression and the U.S., Japan and Europe fell into simultaneous recessions.

Banks Climb

Allianz increased 4.4 percent to 66.67 euros. Munich Re, the world’s biggest reinsurer, added 5.7 percent to 112.79 euros. Postbank, the country’s largest consumer bank by clients, gained 3.1 percent to 9.93 euros.

Infineon advanced 6.6 percent to 89.5 cents. Gross margin at Intel, or the percentage of sales remaining after taking out production costs, was 53 percent last quarter, the world’s biggest chipmaker said.

Deutsche Lufthansa AG rose 3.5 percent to 10.73 euros, a two-week high. Europe’s second-largest airline cut its fuel cost estimate for this year to 3.7 billion euros ($4.9 billion) from 5.6 billion euros, Dow Jones reported, citing Helmut Fredrich, vice president for corporate fuel management.

Jet-fuel prices in northwest Europe have dropped 66 percent from a high reached in July, Bloomberg data show.

The following stocks also rose or fell in German markets. Symbols are in parentheses.

HeidelbergCement AG (HEI GY), Germany’s largest cement maker, surged 7.4 percent to 30.91 euros. Goldman Sachs Group Inc. has expressed interest in a stake of the asset of deceased billionaire Adolf Merckle, in a potential deal with U.S. buyout firm TPG, the Wall Street Journal reported, citing people familiar with the situation.

Merck KGaA (MRK GY), the world’s largest maker of liquid crystals used in flat-screen televisions, dropped 2.6 percent to 64.08 euros. South Korea’s LG Display Co., the world’s second- largest maker of liquid-crystal displays, reported its first loss in seven quarters after the global recession eroded electronics demand and the company was fined for price-fixing.

Norddeutsche Affinerie AG (NDA GY), Europe’s largest copper refiner, rallied 6.1 percent to 25.16 euros. Copper rose in London as China’s biggest inventory slide in almost a year signaled declining supplies.

ProSiebenSat.1 Media AG (PSM GY) surged 7.7 percent to 1.68 euros. Germany’s biggest private broadcaster aims to recover advertising market share for its German free-to-air business, it said in a presentation for investors.

SGL Group (SGL GY) rallied 5.7 percent to 17.73 euros, rising for the first time in nine days. Goldman lifted its recommendation for the world’s largest maker of carbon and graphite products to “neutral” from “sell.”

TUI1 GY (TUI1 GY) plunged 6.1 percent to 6.78 euros. The Hapag-Lloyd shipping line of Europe’s largest tour operator may be postponed after Royal Bank of Scotland Group Plc withdrew from the group supporting the transaction, online news service Lloyd’s List reported.

To contact the reporter on this story: Stefanie Haxel in Frankfurt at shaxel@bloomberg.net.

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U.K. Stocks Rise for First Time in Eight Days; Royal Bank Gains

By Adam Haigh

Jan. 16 (Bloomberg) -- U.K. stocks rose for the first time in eight days after the U.S. government announced further plans to prop up the ailing banking system and rising commodity prices triggered a rally in oil and metals producers.

Royal Bank of Scotland Plc soared 8 percent after Bank of America Corp., the largest U.S. bank by assets, received $138 billion to prevent the global financial crisis from deepening. HSBC Holdings Plc gained 1.2 percent as Dresdner Kleinwort advised clients to buy shares of Europe’s biggest bank. Royal Dutch Shell Plc and Anglo American Plc added more than 3 percent.

The benchmark FTSE 100 Index climbed 113.94 points, or 2.8 percent, to 4,235.05 at 12:11 p.m. in London. The gauge looks set to end its longest losing streak in more than four years as it pares this week’s decline to 4.8 percent. The measure is trading at 7.45 times reported earnings, close to the low of 6.43 times profits on Nov. 21.

“It looks like we are going to finish the week on a fairly positive note,” said Tom Hougaard, chief market strategist at City Index Ltd. in London. “There is going to be some bargain hunting going into the weekend.”

The FTSE All-Share Index added 2.6 percent today and Ireland’s ISEQ Index gained 0.9 percent.

Royal Bank added 8 percent to 43.1 pence. The U.S. government agreed to invest $20 billion more in Bank of America and guarantee $118 billion of assets “as part of its commitment to support financial-market stability,” the Treasury Department, Federal Reserve and Federal Deposit Insurance Corp. said in a joint statement shortly after midnight in Washington.

HSBC Rises

HSBC added 1.2 percent to 554 pence as Dresdner raised its recommendation on the stock to “buy” from “hold,” saying a dividend cut is already “fully discounted” in the share price. The shares had tumbled 15 percent in the past two days as Morgan Stanley speculated the bank may have to trim its dividend and raise capital.

Shell, Europe’s largest oil producer, climbed 3.4 percent to 1,725 pence. Crude oil rose for the first time in three days.

Anglo American, which controls the world’s biggest platinum producer, added 7.9 percent to 1,376 pence as platinum increased. Copper, lead and nickel also advanced.

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

Dori Media Group Ltd. (DMG LN) declined 37.5 pence, or 45 percent, to 45 after the Tel Aviv-based soap-opera producer said sales slowed in the fourth quarter on “increased caution” from program buyers.

Eidos Plc (EID LN) soared 3 pence, or 25 percent, to 15 after the maker of the “Tomb Raider” video game said it got a preliminary approach from an unidentified party which may or may not lead to an offer being made for the company.

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

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Global Stocks Rise; MSCI World Gains First Time in Eight Days

By Sarah Jones

Jan. 16 (Bloomberg) -- Stocks in Europe and Asia rallied, sending the MSCI World Index to its first gain in eight days, and U.S. futures rose after Bank of America Corp. received a $138 billion lifeline and Intel Corp. said profitability may rebound. UBS AG increased 3.7 percent as the U.S. government agreed to invest $20 billion more in Bank of America and guaranteed $118 billion of assets to help the lender absorb Merrill Lynch & Co. Citigroup Inc. rose 5.2 percent after saying it will split in two. Infineon Technologies AG and Hynix Semiconductor Inc. added more than 3 percent, while Intel gained 4.1 percent.

The MSCI World advanced 1.7 percent to 867.92 at 1:12 p.m. in London. The gauge of 23 developed nations had retreated 10 percent over the past seven days as companies from Deutsche Bank AG to Alcoa Inc. fuelled concern the global recession and financial crisis, which has seen banks and insurers rack up $1 trillion in credit losses and writedowns since the start of last year, are snuffing out profit growth.

“There is a little bit of confidence in the market,” said Richard Lacaille, chief investment officer at State Street Global Advisers, which has about $1.7 trillion under management. “It is a good sign that resolute action is taken because it’s evident that it’s needed,” he told Bloomberg Television.

Europe’s Dow Jones Stoxx 600 Index climbed 2.6 percent. The regional benchmark had posted its longest stretch of declines since 2004 as banks shares tumbled to a 12-year low on concern financial firms will need to raise more capital.

Yen, China Stimulus

The MSCI Asia Pacific Index climbed 2.1 percent as a weaker yen boosted Japanese electronics and auto producers. China’s CSI 300 Index gained 3.8 percent this week amid speculation the central bank will cut interest rates for the sixth time since September and the government will announce further measure to revive the economy.

China said today it’s enacting stimulus plans for nine industries including steelmakers, carmakers and shipbuilders as the world’s third-largest economy enters its deepest slowdown in almost two decades.

Futures on the Standard & Poor’s 500 Index rallied 1.4 percent, indicating the benchmark index for U.S. equities will trim its 5.2 percent weekly drop.

Ten-year Treasuries fell the most in almost two weeks on speculation government efforts to bail out U.S. banks and the economy will cause the deficit to balloon.

The pound rose for a third straight day, gaining against the euro, the dollar and the yen, as the U.K. government pledged to help struggling homeowners to pay their loans.

‘Commitment’

UBS, Switzerland’s largest bank, added 3.7 percent to 14 francs. Deutsche Bank, Germany’s biggest bank by assets, increased 2.5 percent to 21.28 euros. Bank of America gained 2 percent to $8.49 in early trade. The largest U.S. bank by assets posted its first loss since 1991 and cut the dividend today.

The U.S. government agreed to rescue Bank of America and Merrill Lynch “as part of its commitment to support financial- market stability,” the Treasury Department, Federal Reserve and Federal Deposit Insurance Corp. said in a joint statement shortly after midnight in Washington.

Citigroup posted an $8.29 billion fourth-quarter loss, completing its worst year, as the credit crisis eroded mortgage- bond prices and customers missed more loan payments. Citigroup added 5.2 percent to $4.03 in early trading after saying it will split itself into two businesses.

Anglo Irish Bank

Anglo Irish Bank Corp. shares were suspended today after the government seized control in the wake of a scandal that claimed the chief executive officer, chairman and the nation’s financial regulator. Irish Finance Minister Brian Lenihan said late yesterday that a proposed 1.5 billion-euro ($1.97 billion) cash injection was “not now the appropriate and effective means to secure” the bank’s viability and that he was taking the “decisive step of public ownership.”

Infineon, Europe’s second-largest chipmaker, increased 3.6 percent to 87 cents. ASML Holding NV, the region’s biggest maker of semiconductor equipment, added 3 percent to 12.75 euros.

Hynix advanced 5.8 percent to 6,950 won in Seoul. Elpida Memory Inc., Japan’s largest memory chipmaker, soared 14 percent to 559 yen.

Intel, the world’s biggest chipmaker, yesterday said gross margin, or the percentage of sales remaining after taking out production costs, was 53 percent last quarter. That figure will be in the low 40s this quarter, marking the “trough,” Chief Financial Officer Stacy Smith said on a conference call. Intel gained 4.1 percent to $13.84 in early New York trading.

Metal Prices

Rio Tinto Group led a rebound in commodity producers after base metal prices advanced and the Financial Times reported the third-biggest mining company is not considering an emergency rights issue, citing Chief Executive Officer Tom Albanese.

Rio Tinto added 7.9 percent to 1,512 pence. Xstrata Plc, the fourth-largest copper producer, surged 7 percent to 749 pence.

Copper rose in London, trimming this week’s drop, as China’s biggest inventory slide in almost a year signaled declining supplies. Aluminum, lead, nickel and zinc also advanced on the London Metal Exchange.

Royal Ahold NV climbed 7.6 percent to 9.17 euros. The Dutch owner of Stop & Shop supermarkets in the U.S. said fourth-quarter sales rose 13 percent to 6.6 billion euros as shoppers responded to price cuts and a stronger dollar boosted revenue. That matched the median estimate of 16 analysts surveyed by Bloomberg News.

The benchmark index for European options, the VStoxx Index, dropped 15 percent to 47.87, the steepest slump since October. The gauge, which measures the cost of using options as insurance against declines in the Euro Stoxx 50 Index, surged to 87.51 in October, the highest since at least 2001, data compiled by Bloomberg show.

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

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Brazil Bovespa Futures Gain on Petrobras Reserves, Metals Rise

By Alexander Ragir

Jan. 16 (Bloomberg) --Brazil’s Bovespa stock-index futures gained, indicating the index may rise for a second day, as metals prices jumped and Petroleo Brasileiro SA said it has 11.2 billion barrels of oil and natural gas reserves.

Petroleo Brasileiro jumped 7.3 in Germany after Itau Corretora said the state-controlled oil company’s announcement of proven reserves of oil and the natural-gas equivalent is “good news.” Cia. Vale do Rio Doce, the world’s biggest iron ore miner, advanced 6.2 percent in Germany as metals prices surged.

Bovespa index futures advanced 1.6 percent to 40,150 at 7:32 a.m. New York time.

“In our view, ‘when cash is no longer king’ and the market goes back to fundamentals, reserves are what really matter,” wrote Itau analyst Paulo Kovarsky in a note to clients.

The Bloomberg Base Metals 3-Month Price Commodity Index gained 2.8 percent to 116.39.

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

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U.S. Stock-Index Futures Rise; Bank of America, Citigroup Gain

By Adria Cimino

Jan. 16 (Bloomberg) -- U.S. stock-index futures advanced after the government gave further support to Bank of America Corp. in an effort to prevent the financial crisis from deepening and Citigroup Inc. said it will split in two.

Bank of America jumped 9.4 percent in pre-market trading in New York after getting a $138 billion government lifeline. Citigroup added 11 percent after announcing plans to form two new businesses and to split the units it wants to keep from other, “non-core” assets. Intel Corp. gained 3.8 percent as it said profitability may rebound after the first quarter.

Standard & Poor’s 500 Index futures expiring in March added 1.8 percent to 854.5 as of 12:28 p.m. in London, suggesting the benchmark will rebound from its worst ever start to a year. Dow Jones Industrial Average futures gained 1.7 percent to 8,300 and Nasdaq-100 Index futures increased 1.6 to 1,196.25.

“What’s reassuring is the U.S. government isn’t reluctant to offer funding,” said Alexandre Iatrides, a fund manager at KBL Richelieu, which oversees $5.3 billion in Paris. “The U.S. will rebound before Europe.”

Bank of America gained 9.4 percent to $9.10. The largest U.S. bank by assets posted its first loss since 1991 and cut its quarterly dividend to 1 cent a share from 32 cents after the government agreed to invest $20 billion more in the lender and guarantee $118 billion of assets to help it absorb Merrill Lynch & Co.

Bank of America’s fourth-quarter loss of $1.79 billion, or 48 cents a share, compared with net income of $268 million, or 5 cents, a year earlier. Citigroup analyst Keith Horowitz estimated on Jan. 11 that Bank of America would post a $3.6 billion loss.

Citigroup Loss

Citigroup, the financial services company whose shares have fallen 43 percent this year, advanced 11 percent to $4.26 in New York. The bank posted an $8.29 billion fourth-quarter loss, completing its worst year, as the credit crisis eroded mortgage- bond prices and customers missed more loan payments.

The net loss of $1.72 a share compared with a loss of $9.8 billion, or $1.99, a year earlier. The results included a $3.9 billion gain from the sale of a German consumer bank. Analysts, excluding the gain, estimated the company would report a loss of $1.08 a share, according to a survey by Bloomberg.

Stocks yesterday ended a whipsaw session higher after expectations grew that Bank of America would get more federal aid and Citigroup denied speculation the government planned to take over the bank.

Worst Start

The S&P 500 is off to its worst start to a year and is headed for its biggest weekly retreat since November after profits from Alcoa Inc. trailed estimates and investors speculated banks need capital. Since rallying 20 percent from its Nov. 20 low on speculation government spending would revive the economy, the Dow has dropped 9.1 percent over the last nine days.

Both indexes posted their biggest annual declines since the Great Depression in 2008, with the S&P 500 reaching an 11-year low of 752.44 and the Dow sliding to the lowest since 2003 on Nov. 20. Stocks tumbled as more than $1 trillion in bank losses froze lending and spurred a global recession.

A decline in U.S. stock indexes below the 2008 lows from November may trigger a rout that pushes benchmark averages to levels not seen since the mid-1990s, according to technical analysts Ralph Acampora and John Murphy. Should the Dow fall below the 7,552.29 it touched on Nov. 20, it might tumble to 6,000, Acampora, who retired from Knight Capital Group Inc. in October 2007 after four decades on Wall Street, said.

Cost of Living

Intel increased 3.8 percent to $13.80 in New York. The world’s biggest maker of semiconductors said profitability may rebound after the first quarter, when customers finish working through excess supplies. The company said revenue this quarter may be about $7 billion, without providing an official forecast.

The cost of living in the U.S. probably fell in December as the recession deepened, capping the first annual decline in a half century, economists said ahead of a government report today. Consumer prices probably dropped 0.9 percent last month, a third straight decline, according to the median estimate in a Bloomberg News survey. Other reports may show consumer confidence and industrial production weakened.

The Labor Department’s price report is due at 8:30 a.m. in Washington.

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

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Asian Market Update

Daily Forex Fundamentals | Written by Trade The News | Jan 16 09 07:20 GMT |

Asian Equities Cheer TARP II and Bank of America Bailout in US; Nikkei Shrugs Sour BOJ, Outperforming Regional Peers on Falling Yen; Korea Banks Under Review at Moody's Equity markets in Asia traded up across the board on additional relief targeted at renewed turmoil in the US financial sector. In the evening coinciding with the farewell address of Pres. Bush, Senate Democrats won in releasing the remaining TARP funds with a 52-42 vote across party lines. Subsequently, late in the Asian session, US Treasury agreed to provide yet another $20B in fresh capital to Bank of America, presumably in part for assistance with its assimilation of the Merrill Lynch assets. Under the announced arrangement, the Treasury will acquire preferred stock paying 8% dividend, absorb up to $10B in potential losses, and will then provide majority of protection against larger losses beyond that sum. Nikkei225, which had been trading near session highs on broad local currency weakness ahead of the BAC announcement rallied sharply for an overall 3% session gain to reclaim most of the ground lost the day before. Likewise front month S&P contract spiked sharply to session highs on the BAC news for a 1% overall rally, portending more strength in US hours as rumors of a weekend nationalization of a large US institution grow. As impressive as the gains on the Nikkei appear, the bulk of company specific news continued to disappoint, raising questions over sustainability of the Tokyo rally. Electronics giants Panasonic cut its annual income forecast on demand-driven concerns and Hitachi Ltd. was reported to post a substantial loss. Hitachi Construction was also rumored to implement additional output cuts, according to a research note from UBS. In Tokyo financials, Mitsubishi UFJ was expected to write down the value of its securities portfolio by as much as $3.2B in Q4 and was said to be in the dark about an estimate of valuation loss on its earnings, while Mizuho Financials announced top management restructuring. Fuji Heavy has also reportedly cut its fiscal year forecast from a ¥10B profit to a ¥19B loss stemming from the slumping sales amid sharp gains in Japan's currency. Additionally, the company scrapped its plans to construct a car plant, announced additional production cuts, and placed its dividend policy under review. In turn, Bank of Japan Governor Shirakawa offered a gloomy outlook for the economy, anticipating further deterioration in economic conditions domestically and worldwide, expressing concern over persisting tightness in bank lending conditions, and forecasting more currency-related weakness in the export sector. Economics Minister Yosano echoed that sentiment, suggesting that no recovery was in sight to machinery orders after prior session's report of a two-decade low in machinery demand. Elsewhere in Australia, shares of miners gained briskly after prior session declines. BHP, Fortescue, and Rio Tinto rose 3.5% in spite of a 40% profit forecast cut for the latter at JP Morgan. Gold producers Newcrest and Lihir were also boosted with an over 5% bounce in gold prices back above $820 level with 2.8% and 4.3% respective rallies. Woodside Petroleum underperformed on both external and internal concerns, with crude oil rally mainly contained and the company reporting suspension of a natural gas project because of deterioration in market conditions. Aussie Real Estate sector's Centro Property Group was sharply higher after securing a 3-year extension on debt totaling A$3.9B. The broader S&P/ASX index was up as high as 1.4% but ended the session with a more subdued 0.6% gain. In Seoul, Kospi index ranged between unchanged and 1% gains before rising sharply following the US Bank of America announcement to finish the day up 2.2%. Moody's warned of a potential downgrade for South Korea's financial names, citing concerns over banks' currency related obligation. Some of the companies named included Woori, Shinhan, and Hana. Among other shares grabbing headlines, Samsung Electronics announced reorganization into parts and product business divisions while also combining its chip and LCD units presumably to rein in costs and in crease efficiency, and Industrial Samsung Heavy secured a KRW907.6B contract from European client to build a floating natural gas production and storage plant estimated to process 2.5m tons. Additionally, the head of South Korean government research agency KDI expected 2009 GDP growth of around 1% vs government estimates announced in early December targeting 2% growth. In currencies, the dollar and Japanese Yen were broadly weaker against the European and Commodity oriented majors as deleveraging flows dominating trading for much of the week were scaled back following the developments impacting the US financials. EUR/USD rallied as high as 1.3270 from 1.3030 intraday low, GBP/USD spiked to near 1.49 from 1.4485 lows, while USD/CHF sold off 130 pips from its peak to near 1.1150. EUR/JPY peaked at 120 after US-session low under 116.30, GBP/JPY traded up over 5 big figures from the lows to 134.50, and USD/JPY peaked at 1-week high of 90.60. AUD/USD traded as high as 0.6750 from session lows under 0.6540, and USD/CAD matched intra-day low of 1.2410, down from 1.2670 session high. At the time of writing crude oil is little changed, after declining by 5% during the NY session. The NY drop in crude came as OPEC predicted that oil demand would decline by 4.2% this year after noting in Nov that it expected 2009 global oil demand to grow by 0.6%. In other oil related news, the American Petroleum Institute disclosed that in 2008 US fuel demand had its largest decline since 1980. Overall oil prices are on track to have the largest weekly drop in 1 month. Spot Gold is higher on the session and is tracking the gains by the EUR, GBP and CHF against the USD. During the NY session, gold declined by at little more than $1.00, as the USD gained against the EUR following the ECB's rate decision. In terms of gold demand, the SPDR Gold Trust exchanged-traded fund, largest global gold ETF, disclosed that it increased its bullion holdings to a record 790.1 metric tons from 775.33 metric tons in late 2008. Trade The News Staff Trade The News, Inc. Legal disclaimer and risk disclosure All information provided by Trade The News (a product of Trade The News, Inc. "referred to as TTN hereafter") is for informational purposes only. Information provided is not meant as investment advice nor is it a recommendation to Buy or Sell securities. Although information is taken from sources deemed reliable, no guarantees or assurances can be made to the accuracy of any information provided. 1. Information can be inaccurate and/or incomplete 2. Information can be mistakenly re-released or be delayed, 3. Information may be incorrect, misread, misinterpreted or misunderstood 4. Human error is a business risk you are willing to assume 5. Technology can crash or be interrupted without notice 6. Trading decisions are the responsibility of traders, not those providing additional information. Trade The News is not liable (financial and/or non-financial) for any losses that may arise from any information provided by TTN. Trading securities involves a high degree of risk, and financial losses can and do occur on a regular basis and are part of the risk of trading and investing.

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ECB Cuts And Hints At Further Easing

Daily Forex Fundamentals | Written by KBC Bank | Jan 16 09 06:59 GMT |

... ECB cuts rates for the 4th month in a row. Mr. Trichet keeps hope alive for further chop in March. Tone of comments underlies concern about weakening economy. We still see rates reaching a floor of 1% by summer. It took 32 months for the European Central Bank to raise rates from 2 per cent to 4.25 per cent. It has taken just 4 months to reverse this process. The sharp divergence between the pace at which interest rates (and many other asset prices) rise and fall calls to mind the comparison between escalators on the way up and elevators on the way down. The key question now is whether rates have further to fall and when any drop might occur. Although Mr. Trichet was his usual guarded self at today's press conference, it was significant that he didn't seek to rule out the possibility of further rate cuts. Indeed, he emphasized that 2 per cent was not necessarily the lower limit for rates. He indicated that the March Governing Council meeting would be 'an important rendezvous'. This suggests the strong possibility of a further rate cut in March. We think an emerging picture of a further sharp deterioration in activity accompanied by strong disinflationary pressures will prompt a fall in ECB rates as low as 1% in the summer. Today's press conference statement by Mr. Trichet was less hawkish than might have been feared. This probably reflects three considerations. First of all, the scale of deterioration in Eurozone activity suggested by recent economic indicators may have come as a major surprise to the ECB and made the Governing Council less resistant to the possibility that rates may need to fall below 2 per cent. Second, there may be concern that any signal that rates were unlikely to fall further could cause major problems for financial markets that are very nervous and fragile at present. An adverse reaction could have triggered an unwelcome rebound in market interest rates, a sell-off in equity markets and a rise in the value of the Euro on FX markets. Clearly such developments would amount to a de facto tightening of policy which the ECB would be keen to avoid at this point. A third factor in both today's rate decision and the tone of Mr. Trichet's comments might well be recent evidence that the downturn in activity was being felt more acutely in Germany of late. Previously, influential ECB Governing Council members such as Mr. Weber, the head of the Bundesbank and Mr. Stark, a former German Finance Ministry and Bundesbank official, had tended to downplay the prospect of aggressive ECB policy actions. However, very recently, prospects for the German economy have taken a marked turn for the worse. Together with more broadly based signs of economic difficulties worldwide, this may have lessened the resistance of the hawkish wing of the ECB to a further easing. Certainly, Mr. Trichet's comment that today's decision was unanimous is notably different to the impression that there were significant internal divisions in relation to the December rate cut. It is significant, if scarcely surprising, that even after today's rate cut, the ECB continues to recognise that the risks to economic activity are on the downside. We think that the evidence of the next month or so will point towards a further intensification of those risks and prompt a further easing in policy at the March Governing Council meeting. Mr. Trichet made little effort to rein in market expectations of further near term rate cuts beyond indicating that today's move incorporates the anticipation of future economic weakness. He also hinted at a downside limit to rates by referring to a determination not to get caught in a liquidity trap - in other words, not to have rates so low that changes in policy have little or no impact on the economy. While the concept of the liquidity trap is widely known, there is widespread disagreement as to whether it operates in practice. Certainly, few would suggest that Euro area rates are anywhere close to such a boundary. Mr. Trichet was reluctant to be drawn out in any detail on this topic. We think this implies he was trying to emphasise that the ECB did not envisage following the US and cutting rates close to zero. This still leaves considerable leeway for further easing. As if to emphasise this, Mr. Trichet repeatedly indicated that while the new level of rates is historically low 'we did not say 2 per cent is the limit'. We think the ECB will be forced to cut rates a good deal further in the months ahead. The speed of decline both in economic activity and inflation across the Eurozone is creating substantial scope for a further easing of policy. With Euro area GDP likely to shrink by around 1.5% in 2009 and inflation set to tumble towards 1 per cent, mechanical Taylor-Rule based estimates would imply the ECB refinancing rate could fall to around 1.25%. Diagram 2 below provides some historic context of the scope for further rate cuts. Since 1999, the ECB refinancing rate has averaged about 3.1%. This is roughly one percentage point above the average annual growth rate over that period, although the diagram shows that monetary policy typically responded to downswings in activity with some lag. Clearly, precedent hints at the possibility of extremely low rates in the coming year. Another way of assessing the scope for easing is to look at the ways in which 'real' or inflationadjusted policy rates have moved through recent economic cycles. Diagram 3 shows that the ECB brought 'real' interest rates (interest rates less inflation) down to zero at the low point in the previous rate cycle. Again, this points to a policy rate approaching 1% later this year as inflation eases further. In summary, today's ECB decision to cut rates by 50 basis points reflects a rapid and appropriate response to emerging signs of a further step-down in Eurozone economic activity. As Diagrams 2 and 3 suggest, the history of 10 years of ECB policymaking implies a greater sensitivity to changes in economic activity than most ECB comments would suggest. Although Mr. Trichet said that today's decision to cut rates by 50 basis points anticipates further economic weakness, we think the next couple of months will bring evidence of a significant deterioration in activity and in economic prospects which will prompt a further drop in inflation. In turn, this suggests the likelihood of further rate cuts in March and Disclaimer: This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.

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Asia Session Recap

Daily Forex Fundamentals | Written by Forex.com | Jan 16 09 06:38 GMT |

With US stocks breaking a six day losing streak amidst investor optimism about a fresh injection of capital from the stimulus package, risk appetite was back in play and the Yen suffered for it. USD/JPY bottomed out early in NY trading at 88.50 and hasn’t looked back since as the Asia session saw an early low of 89.72 quickly disappear as the pair topped out at 90.57 as of this writing. Crosses were well bid as well today, as we saw the EUR/JPY rise from 117.77 to just near 119.77, a quick and orderly two handle move. NZD/JPY made a nice reversal from NY lows of 47.15 as it flew to highs just over 49.60. AUD/JPY turned around as well, from 58.18 NY lows to 60.90 Asian highs. Many traders feel that the upcoming inauguration of President elect Obama will be good for stocks and bad news for the Yen, however it still remains to be seen how his presidency will turn around a global economic crisis. After last nights expected ECB rate cut of 50bp to 2.0 the real news was ECB President Trichet stating that a zero rate policy was not in the cards. The EUR/USD has seen some wild moves over the past 24 hours, a late NY low of 1.3025 was quickly forgotten as the pair hit a top of 1.3275 in late Asian trading, Keep in mind that US equities are closed on Monday due to the Martin Luther King holiday….we will be here as usual. Have a nice weekend. Upcoming Economic Data Releases (London Session): 1/16/2009 8:15 SZ Producer & Import Prices (MoM) DEC -1.40% -0.60% 1/16/2009 8:15 SZ Producer & Import Prices (YoY) DEC 1.10% 0.60% 1/16/2009 8:30 UK BOE Deputy Governor Gieve to Make Speech 16-Jan 1/16/2009 10:00 EC Euro-Zone Trade Balance NOV 0.9B 1.0B 1/16/2009 10:00 EC Euro-Zone Trade Balance sa NOV -1.3B -4.8B 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.

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Today's Market Outlook

Daily Forex Technicals | Written by Windsor Brokers Ltd | Jan 16 09 07:54 GMT |

EURUSD Reverses back from yesterday's 1.3025 low, extending above 1.3220/39 congestive tops, to reach 1.3275 thus far. Wedge-like pattern from Monday's 1.3444 weekly high, hints basing. Reclaim of 1.3335, however, needed to confirm the recovery. Res: 1.3335, 1.3374, 1.3426, 1.3447 Sup: 1.3144, 1.3093, 1.3055, 1.3025 GBPUSD Price action from 1.4560, 13 Nov 08 low, shows double zigzag pattern. Retracing Tuesday's 1.4827/1.4470 fall suggests further reversal to 1.4922/1.5030. Loss of 1.4350, however, dampens. Res: 1.4910, 1.4922, 1.4954, 1.4993 Sup: 1.4758, 1.4710, 1.4694, 1.4645 USDJPY Continues to firm, following yesterday's downside rejection at 88.49, just above 88.42, 19 Dec higher low. Supportive near-term studies suggest basing for fresh advance towards 90.84, 38.2% retracement of 94.65/88.48 decline. Res: 90.60, 90.83, 90.99, 91.66 Sup: 89.54, 89.25, 89.06, 88.35 USDCHF Struggles to clear 1.1280, 06 Jan high and 1.1310, 50% retracement of 1.2251/1.0368 decline, following breakout of a minor 4-day bull flag. Risk is seen for loss of 1.1098 to signal bull easing. Res: 1.1280, 1.1310, 1.1378, 1.1447 Sup: 1.1135, 1.1120, 1.1098, 1.1069 Windsor Brokers Ltd http://www.windsorbrokers.biz The information contained in this document was obtained from sources believed to be reliable, but its accuracy or completeness cannot be guaranteed. Any opinions expressed herein are in good faith, but are subject to change without notice. No liability accepted whatsoever for any direct or consequential loss arising from the use of this document.

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Technical Analysis for Major Currencies

Daily Forex Technicals | Written by Crown Forex | Jan 16 09 07:31 GMT |

EURO The pair continues to trade within a downside channel after breaching minor resistance levels where it is currently heading towards the key support for the channel near 1.3600 supported by the possibility of breaching a slight upside pattern at 1.3245 where if the pair was able to build a solid base above this level, it will then continue to incline. The short term trend is still tot he downside despite the expected incline to be seen during today's session. The trading range for today is among the key support at 1.2815 and the key resistance at 1.3630 The general trend is to the downside as far as 1.5080 remains intact with targets at 1.2340 and 1.2225 Support: 1.3245, 1.3215, 1.3140, 1.3075, 1.3030 Resistance: 1.3290, 1.3305, 1.3330, 1.3390, 1.3470 Recommendation: Sell the pair below 1.3330 with targets at 1.3210 and stop loss with a four hour close above 1.3440 GBP The pair was able to incline where it is currently targeting the 50% correction at 1.4915. Momentum indicators show the pair being overbought heavily which makes us believe that the pair will decline once again. Note that breaching the above mentioned correction at 1.4915 with a four hour close could open the way for the pair to reach 1.5030 which is the 61.8% correction. The trading range for today is among the key support at 1.4625 and the key resistance at 1.5280 The general trend is to the downside as far as 1.9400 remains intact with targets at 1.4135 and 1.4095 Support: 1.4835, 1.4810, 1.4780, 1.4730, 1.4685 Resistance: 1.4915, 1.4980, 1.5030, 1.5085, 1.5140 Recommendation: Sell the pair below 1.4915 with targets at 1.4815 and stop loss with a four hour close above 1.4980 JPY The pair was able to return to tade within an upside channel as it was able to maintain levels above the 76.4% correction for the ascending channel that started on 17-12-2008 at 88.95. We now see volatility in the pair with slight tendency to the upside where momentum indicators show the pair being overbought. The pair is heading towards the 38.2% correction at 90.85 - 90.90 where this level is for the descending channel that started on 06-01-2009 The trading range for today is among the key support at 88.25 and the key resistance at 92.30 The general trend is to the downside as far as 102.10 remains intact with targets at 84.95 and 82.60 Support: 90.00, 89.80, 89.05, 88.40, 88.25 Resistance: 90.55, 90.90, 91.15, 91.60, 92.30 Recommendation: Buy the pair above 90.00 with targets at 90.80 and stop loss with a four hour close below 89.80 CHF Even with the pair inclining as we expected yesterday, it failed to build a solid base above the resistance level at 1.1265 resulting in a reverse to the downside to breach the key support for the ascending channel as seen in the above picture. From here we expect the direction to be to the downside for today with high volatility as the Stochastic indicator shows the pair being oversold. The trading range for today is among the key support at 1.0885 and the key resistance at 1.1395 The general trend is to the upside as far as 1.0570 remains intact with targets at 1.2570 and 1.2780 Support: 1.1135, 1.115, 1.1095, 1.1065, 1.1005 Resistance: 1.1180, 1.1200, 1.1245, 1.1265, 1.1300 Recommendation: Sell the pair below 1.1180 with targets at 1.1065 and stop loss with a four hour close above 1.1265 CAD The pair is now attempting to correct to the downside to shake off excess buying orders that it has encountered during the past two days. We expect to see a slight decline today where the ADX indicator is supporting the downside direction. Despite the ascending channel we see in the above picture, momentum and direction indicators are showing the possibility for the pair to retest the support level at 1.2325 with the opportunity of breaching it which will keep teh downside trend intact as far as trading remains below 1.2535 The trading range for today is among the key support at 1.2050 and the key resistance at 1.2690 The general trend is to the upside as far as 1.1780 remains intact with targets at 1.3305 and 1.346 Support: 1.2410, 1.2390, 1.2325, 1.2285, 1.2225 Resistance: 1.2460, 1.2535, 1.2565, 1.2580, 1.2625 Recommendation: Sell the pair below 1.2460 with targets at 1.2335 and stop loss with a four hour close above 1.2535 Crown Forex disclaimer:The above may contain information for investors/traders and is not a recommendation to buy or sell currencies, gold, silver & energies, nor an offer to buy or sell currencies, gold, silver & energies. The information provided is obtained from sources deemed reliable but is not guaranteed as to accuracy or completeness. I am not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trading currencies, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, gold, silver &energies presented should be considered speculative with a high degree of volatility and risk.

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FX Technical Analysis

Daily Forex Technicals | Written by Mizuho Corporate Bank | Jan 16 09 07:27 GMT |

EURUSD Comment: Trying, not very well, to base around the 1.3200 area and a very thin Ichimoku 'cloud'. A break above the 9-day average at 1.3412 may trigger some short-covering. Strategy: Buy at 1.3245/1.3200; stop below 1.3000. Add to longs above 1.3375 for 1.3475 then 1.3600 Direction of Trade: → Chart Levels: Support Resistance 1.3200 " 1.3277 1.314 1.33 1.311 1.3338 1.3093 1.3412 1.3025* 1.3488 GBPUSD Comment: Same old story as we remain stuck in the middle the 'wedge' formation that has dominated since October. Hopefully if other currencies gain a little ground against the US dollar they will help Cable to move higher. Strategy: Buy at 1.4800; stop below 1.4460. First target 1.4925, then 1.5250 Direction of Trade: → Chart Levels: Support Resistance 1.4700 " 1.4889 1.4635 1.4922 1.4470* 1.5035 1.4375 1.525 1.4350* 1.5375* USDJPY Comment: Rallying slowly from a recent low at 88.48 and likely to hold above here today and early next week. We favour another squeeze later today towards the moving averages and probably a test of the lower edge of the 'cloud' next week. Strategy: Trade the range between 89.00 and 91.50 keeping an open mind. Direction of Trade: → Chart Levels: Support Resistance 90.00 " 90.58 89.5 90.84/90.99* 89.21 91.66 88.8 92 88.48* 92.41/91.56* EURJPY Comment: Bouncing cautiously from trendline support, here and in a number of other Yen crosses, adding a little hope that we will not break to new recent lows this month and maybe longer. Over this quarter we currently favour a lot of sideways work in all Yen crosses and therefore trading strategies should adapt considerably. Strategy: Attempt tiny longs at 119.35; stop below 115.80. Target 120.75, maybe 123.40 Direction of Trade: → Chart Levels: Support Resistance 117.83 " 120.02 117.13 120.75 116.57/116.24* 121.95 115.87 123.65 113.62** 126.25 Mizuho Corporate Bank Disclaimer The information contained in this paper is based on or derived from information generally available to the public from sources believed to be reliable. No representation or warranty is made or implied that it is accurate or complete. Any opinions expressed in this paper are subject to change without notice. This paper has been prepared solely for information purposes and if so decided, for private circulation and does not constitute any solicitation to buy or sell any instrument, or to engage in any trading strategy.

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China’s Economy Faces 2009 ‘Hard Landing,’ Fitch Says

By Li Yanping

Jan. 16 (Bloomberg) -- China faces an economic “hard landing” and the risk of social unrest with growth slowing to 6 percent or less this year, the weakest pace since 1990, Fitch Ratings said.

James McCormack, the Hong Kong-based head of Asian sovereign ratings for Fitch, gave the estimate in a teleconference today.

That would be less than half of the 13 percent pace that pushed China past Germany to become the world’s third-biggest economy in 2007, according to revised statistics released this week. As many as 4 million migrant workers lost their jobs last year as factories closed and that figure may jump by another 5 million in 2009, according to Credit Suisse AG.

“The 6 percent number is already what we would call a hard landing in China, meaning rising unemployment and the need for an aggressive policy response,” McCormack said. “Social unrest is a big unknown.”

China’s economy, the biggest contributor to global growth, is running out of steam as exports wane and the property market cools before a 4 trillion yuan ($585 billion) stimulus package kicks in. The slowdown is hurting companies from toy, clothing and electronics makers to airlines and property developers.

The key one-year lending rate may fall to about 3 percent from 5.31 percent by the middle of the year and the government may also hasten spending, McCormack said.

Falling Exports

Exports may decline 6 percent in 2009 from a year earlier because of the global recession, he said. That compares with a 17.2 percent gain last year and the 2.8 percent drop in December.

China faces its biggest “employment adjustment” since reforms of state-owned enterprises in the 1990s, so social stability “is clearly an issue,” McCormack said. “There is a question of how easy it is to redeploy millions or tens of millions of unemployed factory workers to infrastructure construction products that may be located elsewhere in the country.”

Waning exports have led to protests by fired employees, an exodus of 600,000 migrant workers from the manufacturing hub of Guangdong last year, and an urban unemployment rate estimated at more than 9 percent by the Chinese Academy of Social Sciences.

Company sales and profits are falling. China Southern Airlines Co., the nation’s largest carrier, reported a “drastic decrease’” in demand last year and sales slid for China Vanke Co., the largest publicly traded real-estate developer.

The CSI 300 Index of stocks fell 64 percent in the past year.

The economy grew 9 percent in the third quarter of 2008, the slowest pace in five years, as recessions in the U.S., Europe and Japan reduced the appetite for Chinese goods. The fourth-quarter number is due next week.

Central bank Governor Zhou Xiaochuan and Liu Mingkang, the chairman of the China Banking Regulatory Commission, both acknowledged this week that the government risks missing its 8 percent target for creating jobs and maintaining social stability.

To contact the reporter on this story: Li Yanping in Beijing at yli16@bloomberg.net;

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Singapore’s Exports Post Biggest Decline Since 2002

By Shamim Adam

Jan. 16 (Bloomberg) -- Singapore’s exports fell the most since early 2002 in December as a deepening slump in global economies pared demand for electronics and pharmaceuticals.

Non-oil domestic exports dropped 20.8 percent from a year earlier, after contracting 17.5 percent in November, the trade promotion agency said in a statement today. Economists had expected a 17 percent decline. Overseas shipments fell 7.9 percent in 2008, the worst performance in seven years.

The city-state’s economy is in a recession, forcing manufacturers to fire workers and prompting the government to move forward its 2009 budget announcement to speed up its response to the crisis. Overseas shipments are also shrinking in China, Taiwan and South Korea.

“Exports are falling off a cliff across the region and intra-regional demand is also dropping,” said Vishnu Varathan, an economist at Forecast Singapore Pte. “It’s quite terrible and there’s no way Singapore can escape the impact.”

Singapore expects overseas shipments to fall as much as 1 percent this year, while some economists are predicting exports will slide 9 percent, a central bank survey showed.

China’s exports fell the most in almost a decade in December, while Taiwan’s overseas shipments slumped by a record 41.9 percent in the same period.

Singapore’s exports fell a seasonally adjusted 13.1 percent last month from November, when they slid 2.8 percent, today’s report showed. Economists had expected a 5.8 percent decline.

Music Players

Electronics shipments slipped 25.4 percent in December from a year earlier, the 23rd consecutive drop, following a 17.3 percent decline in November. Sales of electronics products by companies including Chartered Semiconductor Manufacturing Ltd. were worth S$4.18 billion ($2.8 billion) last month.

Creative Technology Ltd., the Singaporean maker of accessories for Apple Inc.’s iPod, on Jan. 2 said it eliminated 2,700 jobs or almost half its workforce last fiscal year after demand for its own music players tumbled.

Non-electronics shipments, which include petrochemicals and pharmaceuticals, fell 17.4 percent in December from a year earlier. Pharmaceutical shipments plunged 51.1 percent.

To contact the reporter on this story: Shamim Adam in Singapore at sadam2@bloomberg.net

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