Australia’s Trade Surplus Widens on Exports of Gold

By Jacob Greber

April 2 (Bloomberg) -- Australia’s trade surplus unexpectedly widened in February as imports of consumer goods fell and exports of gold surged.

The trade surplus expanded to A$2.11 billion ($1.47 billion) from a revised A$926 million in January, the Bureau of Statistics said in Sydney today. The median estimate of 18 economists surveyed by Bloomberg News was for A$700 million.

Global demand for resources such as gold, sought by investors seeking to protect their wealth amid a deepening recession, may cushion Australia’s economy even as consumers and businesses cut spending. Central bank Deputy Governor Ric Battellino said this week Australia will remain one of the better-performing economies in the developed world.

“Australian exports steadied in February, after some big falls in the previous few months,” said John Edwards, chief economist at HSBC Bank Australia Ltd. in Sydney.

“Today’s trade numbers will be warmly welcomed” by the central bank, and support the view that policy makers will keep borrowing costs unchanged next week for a second month, Edwards added.

The Australian dollar rose to 70.10 U.S. cents at 12:41 p.m. in Sydney from 69.78 cents just before the report was released. The two-year government bond yield fell 2 basis points to 2.79 percent. A basis point is 0.01 percentage point.

Stocks Rise

The benchmark S&P/ASX stock index rose 2.7 percent, paced by shares of mining companies such as Newcrest Mining Ltd., the nation’s largest gold producer, which jumped 3.5 percent.

Exports rose 4 percent to A$24.9 billion in February, today’s report showed. Gold shipments jumped 55 percent, or by A$784 million. Imports fell 1 percent to A$22.8 billion, led by a 13 percent drop in consumer goods from aboard.

Gold rose to more than $1,000 an ounce in New York in February for the first time in almost a year as investors, spooked by plunging stocks and a global recession, boosted physical demand for the metal.

Gold held in ETF Securities Ltd.’s exchange traded funds rose to 7.32 million ounces, the Jersey, Channel Island’s-based company said on March 30. Zurich-based Zuercher Kantonalbank’s Gold ETF holdings rose to 4.36 million ounces as of March 27, from 4.22 million ounces a week earlier.

The rise in February gold shipments from Australia was almost entirely offset that month by gold imports of A$782 million, HSBC’s Edwards said. “Removing the gold transaction, exports were up about 1 percent and imports fell 4 percent.”

Iron Ore

There are signs demand for exports may slide in coming months.

Chinese steelmakers, the world’s largest buyers of iron ore, have asked suppliers to temporarily cut prices by 40 percent until an annual contract-price agreement is reached, the China Iron and Steel Association said March 30.

The Organization for Economic Cooperation and Development this week forecast the steepest economic contraction in more than 50 years across its member nations. The combined economy of the world’s most-industrialized countries will shrink 4.3 percent in 2009, it said March 31.

“There are limits on how much we can insulate ourselves from what is happening abroad, and therefore there are probably still some difficult times ahead,” the central bank’s Battellino said March 31.

Gross domestic product is “likely to fall in 2009,” he said. In February, the central bank tipped 0.5 percent growth.

Australia’s economy, the world’s biggest shipper of coal and iron ore, unexpectedly shrank 0.5 percent in the fourth quarter, the first contraction in eight years.

Job Losses

Miner BHP Billiton Ltd. is among companies firing workers and trimming investment plans as overseas orders for natural resources fall.

BHP Billiton said in January it will shed 3,400 workers in Australia as it shuts a nickel mine, closes part of a refinery and reduces coking coal output by as much as 15 percent.

Reports published last month show the unemployment rate rose to a four-year high of 5.2 percent in February as companies cut the largest number of full-time jobs in two decades.

Retail sales tumbled 2 percent in February, the biggest drop in almost nine years, as households spent less at department, furniture and clothing stores, a report showed yesterday.

To stoke economic growth, central bank Governor Glenn Stevens and his board lowered the overnight cash rate target by a record four percentage points to a 45-year low of 3.25 percent between September and February. They will cut the rate by at least another quarter point on April 7, according to 13 of 16 economists surveyed by Bloomberg News last week.

To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net

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Rudd Plans Third Stimulus to Help Australia Economy

By Gemma Daley

April 2 (Bloomberg) -- Prime Minister Kevin Rudd plans a third round of economic stimulus in next month’s budget, the Australian newspaper reported, without saying where it got the information.

The Department of Treasury is preparing the massive burst of spending following figures yesterday showing weaker retail sales, the paper reported, without saying how much the next round of spending would cost. The package may also contain some housing stimulus, it said.

“We’d expect there to be further slowing of growth and a further impact on employment,” Treasurer Wayne Swan said in an interview in Tokyo on March 30 about the May 12 budget. “Unemployment will be higher and also further impact on revenue, which means that revenue downgrades will get higher.”

The economy will probably shrink this year for the first time since 1991, Reserve Bank Deputy Governor Ric Battellino said in Brisbane this week. Retail sales fell in February for the first time in five months, figures released yesterday showed.

The central bank has reduced its benchmark rate to 3.25 percent, the lowest in 45 years, to spur an economy that contracted in the fourth quarter for the first time in eight years. Unemployment rose in February to a four-year high of 5.2 percent.

Home-building approvals increased in February for the first time in eight months, suggesting the low borrowing costs and government grants to first-time home buyers will spur construction.

The government has announced A$88 billion ($61 billion) in cash handouts, infrastructure spending and bond market assistance since September 2008.

To contact the reporter on this story: Gemma Daley in Canberra at gdaley@bloomberg.net

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Europe Issues Call for Rules; Obama Urges G-20 Unity

By Tony Czuczka and Edwin Chen

April 2 (Bloomberg) -- German Chancellor Angela Merkel and French President Nicolas Sarkozy called for tighter rules on financial markets, widening a rift among leaders after President Barack Obama urged unity to counter a global recession.

With the Group of 20 summit convening today in London, the European leaders pressed their case, in contrast to Obama’s view that there will be “enormous consensus” to overcome the deepest economic slump since World War II.

“Germany and France will insist that our intentions don’t just remain statements but that they become reality,” Merkel said at the news conference in London yesterday. “We want results, but we don’t want results that have no effect in practice.”

A failure to reach consensus would deal a blow to the summit’s aim of identifying ways to end the recession and prevent a repeat financial collapse that caused it. At the top of the agenda is a common regulatory framework to rein in hedge funds, derivatives trading, executive pay and risk-taking. Nations remain divided about how much stimulus is required as well as about naming tax havens and a new global rulebook for banks.

“It’s not at all clear why Sarkozy and Merkel are making such a show,” said Morris Goldstein, a former economist at the International Monetary Fund and senior fellow at the Peterson Institute for International Economics in Washington. “On regulation, the differences really aren’t that big.”

Geithner’s Effort

U.S. Treasury Secretary Timothy Geithner wants to bring hedge funds, private-equity firms and derivatives markets under federal supervision for the first time. A new systemic-risk regulator would have power to force companies to increase their capital or cut their borrowing, and authorities would be able to seize them if they came unstuck.

“There is a very strong consensus for broader, stronger, higher standards so the world never faces a crisis like this again,” Geithner said in a Bloomberg Television interview yesterday. “The approach that all these countries are going to come together and support is that we agree on higher common standards for oversight.”

The eve of today’s summit was marked by protests in central London’s financial district. Demonstrators clashed with police outside the Bank of England and broke into a Royal Bank of Scotland Group Plc branch. Police in riot gear, on horseback and with dogs moved in to surround demonstrators who smashed windows and entered the RBS branch near the central bank.

Among the leaders, agreements may founder on details as the Europeans pressed for as many specific agreements as possible.

‘Lay the Foundation’

“It’s time to lay the foundations of regulation in the 21st century,” Sarkozy said, adding that tougher regulation is “non-negotiable.”

Merkel, who faces elections in September, said the summit is a “unique chance” to “thoroughly” change the financial system. “That’s why we’re being a bit tough,” she said.

The leaders will agree to regulate large hedge funds and “avoid competitive devaluations” of their currencies, Reuters reported today, citing a draft communiqué.

Merkel said several drafts of the summit conclusions are in circulation, and that work still needs to be done to clinch a final agreement.

Sarkozy said the summit draft doesn’t do enough to crack down on tax cheats. His finance minister, Christine Lagarde, said that he’d walk out of the summit if his push for stricter regulation is rebuffed.

Last Minute Fight

“In the current state of things, the proposals don’t suit France or Germany,” Sarkozy said on Europe 1 radio. “No agreement is secured. I know by experience that we will need to fight until the last minute.”

The disagreements may force the leaders to paper over differences with a watered-down agreement. Expectations “are being managed down,” Stephen Roach, Morgan Stanley’s Asia chairman in Hong Kong, said in an interview.

“There seems to be no real appetite for the leaders to deal with the imbalances in a broader global economy or their own individual economies,” Roach said. “This is not going to be a breakthrough summit.”

The deepening slump has led to a split over how much governments need to spend to reverse the tailspin. Germany and France have led a European Union response that the 400 billion euros ($530 billion) the EU has approved should be enough and any more would drive debt too high.

The recession has worsened since the G-20 leaders last met in November in Washington.

Slump Forecast

The Organization for Economic Cooperation and Development said in Paris that the economy of its 30 members will contract 4.3 percent this year and predicted unemployment in the Group of Seven will reach 36 million late next year. The World Bank lowered its growth forecast for developing countries this year by more than half to 2.1 percent.

“The only thing I wish for is that all the presidents gathered here have the maturity to understand the every day that passes without a solution to the crisis, more people are going to suffer,” Brazilian President Luiz Inacio Lula da Silva told reporters after arriving in London.

To contact the reporters on this story: Edwin Chen in London at echen32@bloomberg.net; Tony Czuczka in London at aczuczka@bloomberg.net

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Japan Bid for G-20 Leadership Stymied by Aso, Economy

By John Brinsley

April 2 (Bloomberg) -- Japanese leaders’ desire to “puff our chests out” at the Group of 20 summit may quickly run out of air when Prime Minister Taro Aso arrives at the Group of 20 summit almost empty-handed.

The country’s fourth leader in three years said before he left Tokyo for London that a new economic stimulus package won’t be ready before mid-April. Two previous efforts totaling 10 trillion yen ($101 billion) failed to arrest a worsening recession in the world’s second-biggest economy.

Aso, who pledged “to exercise leadership,” has yet to give an amount for the next aid package; Japanese industrial production fell 9.4 percent in February and economists estimate gross domestic product shrank almost 11 percent last quarter. G- 20 leaders are vying to show off their responses at today’s meeting, from China’s 4 trillion yuan ($585 billion) spending plan to a joint U.S.-U.K. push for coordinated pump-priming.

“It’s almost laughable,” said Naomi Fink, Japan strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in Tokyo. “There are things he can be doing to support the economy and he’s not doing them. Why should we expect any difference at the G-20?”

It was future Finance Minister Kaoru Yosano who said in January that Japanese leaders needed to pay heed to “whether we’ll be able to puff our chests out and explain what we’ve done” to fix our problems at the G-20. Since then, reports have shown an unprecedented drop in exports along with the decline in industrial production, triggering the yen’s biggest quarterly loss since 2001.

Nakagawa Departure

Japan’s most public moment at global financial crisis meetings to date was in February when then-Finance Minister Shoichi Nakagawa appeared to be drunk during a press briefing in Rome. He resigned, leaving replacement Yosano, 70, juggling three Cabinet positions as the economy stumbles toward its deepest postwar recession.

Japan’s economy probably shrank at an annual 10.9 percent pace last quarter, according to the median estimate of 17 economists surveyed by Bloomberg News. That would follow a 12.1 percent contraction in the final three months of 2008, the worst among advanced economies and the nation’s steepest since 1974.

Confidence at the biggest manufacturers fell to a record low, the Bank of Japan’s Tankan survey showed yesterday. The jobless rate climbed to a three-year high last month with fewer than six positions available for every 10 applicants.

Toyota, NEC Firings

Toyota Motor Corp. and NEC Corp. are among companies that are firing workers, increasing pressure on the government to give more assistance to the unemployed, most of whom don’t receive benefits. Aso’s initial offering to help households -- a cash handout of 12,000 yen per person -- was dismissed by the opposition as an attempt to win votes before an election that must be held within six months.

Political maneuvering has played a big part in Japan’s faltering response to the crisis. Each of Aso’s previous stimulus plans took three months to pass through parliament, held up by a combination of his desire to avoid calling an early election and gridlock caused by the opposition’s control of the upper house.

Aso’s approval rating fell to 9.7 percent in a February survey by Tokyo-based Nippon TV, before climbing to about 20 percent after the top aide to opposition leader Ichiro Ozawa was indicted for campaign funding violations.

Personal Gaffes

Personal gaffes by Aso in the past six months include his saying doctors lack common sense, mothers need to be disciplined more than their children and referring to former British premier Tony Blair as “Tony Brown” during a keynote speech at the World Economic Forum in Davos, Switzerland.

“Talking about credibility with this lot is a contradiction in terms both internationally and domestically,” said Noriko Hama, a professor of economics at Doshisha Business School in Kyoto. “Aso is making a desperate ploy for respect on the international stage after all the lost ground at home.”

Aso, 68, this week pointed to a pledge to provide a $100 billion line of credit to the International Monetary Fund as an example of Japanese leadership. He promised $22 billion in trade assistance as well as $20 billion in overseas aid to developing countries in a meeting yesterday with Indonesian President Bambang Yudhoyono in London.

“Japan does deserve some credit for being ahead of everyone else in providing aid to international institutions,” said Robert Feldman, head of Japan economic research at Morgan Stanley in Tokyo. “We haven’t seen as much leadership on global issues as we’d like.”

Debt Constraints

Japan’s ability to spend its way out of recession is constrained by a debt burden that is projected to swell to 197 percent of gross domestic product next year, according to the Organization for Economic Cooperation and Development. That ratio is the highest among OECD countries and almost double that of the U.S.

The ruling Liberal Democratic Party has recommended buying shares to bolster the stock market and purchasing securities held by banks to boost their capital. Japan’s benchmark Topix Index has tumbled 35 percent in the past year.

The next stimulus will target employment and green energy and may include lowering inheritance taxes, Aso said at a March 31 press conference.

“The government really needs to have a strong recovery package,” said Masahiro Kawai, dean of the Asian Development Bank Institute and a former Finance Ministry and World Bank official. “The U.S. is coming up with a strong fiscal package. The Europeans are somewhat reluctant but want to come up with a similar although smaller package. Japan should also.”

To contact the reporter on this story: John Brinsley in Tokyo at jbrinsley@bloomberg.net

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Global Economic Slide May Be Easing as G-20 Gathers

By Simon Kennedy

April 2 (Bloomberg) -- Leaders of the most powerful nations meet today amid signs that the world economy is stabilizing after months of freefall.

The Group of 20 summit convenes in London as some reports suggest the pace of decline is easing. U.S. durable-goods orders and home sales rose in February, Chinese urban investment surged 26.5 percent in the first two months of the year, and German investor confidence in March reached its highest level since July 2007. The Standard & Poor’s 500 Index last month rallied the most in seven years.

Policy makers must still contend with plenty of bad news: The World Bank is warning of an “unemployment crisis,” and the U.S. Labor Department is forecast to report tomorrow that the jobless rate is now the highest in a quarter-century. The challenge for the G-20 is to turn the early indications that the worst is over into a fully fledged recovery.

“If you look at history, equity markets rally before the economy does,” said Alastair Newton, a political analyst at Nomura International and a former U.K. government official. “With the worst in unemployment to come, there’s still pressure on the leaders to act.”

U.S. President Barack Obama, U.K. Prime Minister Gordon Brown and their G-20 counterparts -- responsible for 85 percent of the world economy -- are gathering to push along an agenda aimed at ending the slump and avoiding a repeat of the financial crisis that caused it. They are scheduled to release a statement and hold press conferences about 3 p.m.

More Cash

As the leaders meet to hasten the recovery, they are signaling they will endorse more cash for the International Monetary Fund, seek to revive trade finance and reject protectionism. Initiatives to rein in toxic assets, hedge funds, derivatives trading, executive pay, tax havens and excessive risk-taking by financial firms are also in the works.

“This meeting will reflect enormous consensus about the need to work in concert to deal with these problems,” Obama said yesterday.

The leaders will agree to regulate large hedge funds and “avoid competitive devaluations” of their currencies, Reuters reported today, citing a draft communiqué.

With police braced for more protests on the streets of the U.K. capital today, there are signs of discord among the policy makers, too. French President Nicolas Sarkozy and German Chancellor Angela Merkel said an agreement to tighten regulation is still some way off, while Japanese Prime Minister Taro Aso criticized Germany’s unwillingness to boost spending.

‘Must Stand United’

“We must stand united in our determination to do whatever is necessary,” Brown said yesterday. Merkel said she and Sarkozy “want results, but we don’t want results that have no effect in practice.”

Evidence is building that the deepest global recession since World War II may be easing -- giving comfort to those who say the G-20’s $2 trillion of fiscal stimulus is working, as well as those who argue that enough has been provided. An index compiled by UBS AG economists to show when economic data is stronger than markets expect logged its biggest jump last month since August.

Among what economists call the possible “green shoots” of recovery: In the U.S., sales of new homes rose unexpectedly in February by 4.7 percent, and factory inventories are falling. The rate of contraction in European manufacturing and services industries is slowing. New bank lending quadrupled in China in February and vehicle sales rose 25 percent, while Japanese companies including automaker Nissan Motor Co. say they will increase production in coming months.

‘Significant Improvement’

“Our bet is that the global economy is poised for significant improvement,” said David Hensley, JPMorgan Chase & Co.’s New York-based director of global economic coordination.

Investors may already be tuning in. The S&P 500 climbed 8.5 percent last month; according to data compiled by the National Bureau of Economic Research and Bloomberg, the index began rising on average five months before recessions ended in 1975, 1982 and 1991.

“You’re seeing encouraging signs of improvement in our markets; we want to reinforce that,” U.S. Treasury Secretary Timothy Geithner said yesterday in an interview.

Even so, bad news still pervades. Data released yesterday showed that Japanese business confidence plunged to a record low, Chinese manufacturing is shrinking and German retail sales unexpectedly fell. Companies in the U.S. cut an estimated 742,000 workers in March, the most since records began in 2001, according to ADP Employer Services.

‘In Danger’

“The global economy is still in danger,” said Stephen King, chief economist at HSBC Holdings Plc. He identifies deflation, falling corporate profits and financial protectionism as the biggest threats. As for financial institutions, Deutsche Bank AG Chief Risk Officer Hugo Banziger said March 30 that the credit crisis is “far from over.”

For the G-20 leaders, who already face declining popularity at home, the biggest concern may be slumping payrolls, as companies from French automaker Renault SA to computer-services provider International Business Machines Corp. ax jobs. In predicting the world economy will contract 2.7 percent this year, the Organization for Economic Cooperation and Development said two days ago that average unemployment in the 30 richest nations will top 10 percent next year.

A report this week already showed that job losses in Japan for February hit a three-year high of 4.4 percent. Unemployment in Europe jumped more than expected to 8.5 percent, the highest since May 2006, data showed yesterday. The U.S. rate for March probably leapt to 8.5 percent from 8.1 percent in February, according to the median estimate of analysts surveyed by Bloomberg News.

“There may eventually be light at the end of the tunnel,” said Nouriel Roubini, the New York University professor who predicted the crisis. Still “the economic recovery will be so weak that it will still feel like a recession.”

To contact the reporter on this story: Simon Kennedy in London at skennedy4@bloomberg.net

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Tankan Shows More Japanese to Lose Their Jobs, Prolonging Slump

By Jason Clenfield

April 2 (Bloomberg) -- Job prospects for Japanese workers just got worse.

The Bank of Japan’s Tankan survey yesterday showed plunging demand has saddled companies with too many employees, signaling more people may lose their jobs. Rising unemployment threatens consumer spending, the strongest part of an economy that shrank an annualized 12.1 percent in the fourth quarter.

“We’re running into a domestic crisis,” said Martin Schulz, a senior economist at Fujitsu Research Institute in Tokyo. “This started with exports but the infection has spread; we’re going to see another round of layoffs.”

The quarterly Tankan index of labor supply at Japan’s biggest companies rose to 20, the highest level since March 2003. A positive number indicates an excess of workers.

Japan’s unemployment rate climbed to a three-year high of 4.4 percent in February and economists surveyed last month said it will reach 5.5 percent in the first quarter of 2010, matching a postwar high set in April 2003.

An unprecedented collapse in sales abroad has already prompted companies from Nissan Motor Corp. to Panasonic Corp. to fire thousands of workers, cut production and restrain wages.

Confidence among large manufacturers slid to minus 58, the lowest since the quarterly Tankan survey began in 1974, the central bank said. Sentiment at the country’s biggest service companies fell to minus 31 from minus 9, a record drop.

Next Victim

“The really bad news is that domestic non-manufacturers are now expecting to get hammered by the crisis,” Schulz said. “Falling employment and decreasing household demand makes them the next victim.”

Consumer spending fell 0.4 percent in the fourth quarter from the previous three months, a fraction of the record 13.8 percent drop in exports that drove the worst quarterly contraction in gross domestic product since the 1974 oil crisis.

The deteriorating job outlook has since started to take a toll. Retail sales dropped at the fastest pace in seven years in February and weakening demand prompted supermarket operators Ito-Yokado Co. and Seiyu Ltd. to cut prices of food, clothing and household products last month.

Nippon Steel Corp., the world’s second-largest mill, said yesterday it will require workers at five domestic plants to take one or two extra days off a month and cut executive pay.

Employees on temporary contracts have borne the brunt of the job cuts. The Labor Ministry estimates that 192,061 non- regular workers will have lost their jobs by June since October.

Safety Net

Some 90 percent of workers are worried about being fired or having their pay reduced, a separate central bank survey showed yesterday. Prime Minister Taro Aso this week promised new spending by mid-April to help patch a benefit system that covers less than a quarter of the country’s unemployed.

“They’ve got what looks like a safety net but in the real world it doesn’t work,” said Jesper Koll, chief executive officer at hedge fund TRJ Tantallon Research Japan in Tokyo.

Some 77 percent of jobless people aren’t getting unemployment benefits, the highest figure among Group of Seven nations except Italy, whose data weren’t available, the International Labour Organization said in a report last week.

The government will offer money to unemployed workers of Japanese descent to return to their native countries in exchange for giving up their permanent and residential visas, the Health Ministry said on March 31.

To contact the reporter on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net

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Sell New Zealand Dollar Versus Canada’s Dollar, Citigroup Says

By Garfield Reynolds

April 2 (Bloomberg) -- Investors may profit by selling New Zealand’s dollar against the Canadian currency after New Zealand central bank Governor Alan Bollard said long-term interest rates had increased too much, Citigroup Inc. said in a note to clients.

New Zealand’s currency may decline to 66 Canadian cents, Citigroup said. The New Zealand dollar traded at 71.49 Canadian cents as of 7:26 a.m. in Sydney, after strengthening 11 percent in March.

To contact the reporter on this story: Garfield Reynolds in Sydney at greynolds1@bloomberg.net

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Australian Dollar Gain on Trade Surplus, N.Z. Dollar Declines

By Candice Zachariahs

April 2 (Bloomberg) -- The Australian dollar advanced to the highest this week after the nation’s trade surplus unexpectedly widened as gold exports surged. New Zealand’s currency fell.

New Zealand’s dollar declined as Finance Minister Bill English said a stronger currency would make it difficult for the nation to snap out of its worst recession in more than three decades. Gains in the Australian dollar may be limited ahead of a meeting of the European Central Bank, where policymakers are forecast to lower their benchmark interest rate to 1 percent.

“The Aussie dollar’s kneejerk reaction was to rally,” said Sue Trinh, a senior currency strategist at RBC Capital Markets in Sydney. “Gains over 70 cents will not be sustainable in an environment of a sharply slowing global economy,” she said referring to the currency by its nickname.

Australia’s currency rose 0.2 percent to 70.04 U.S. cents, near its strongest this week, as of 12:01 p.m. in Sydney from 69.78 cents before the report and 69.93 cents late in New York. It advanced 0.2 percent to 69.04 yen.

New Zealand’s dollar fell 0.4 percent to 56.55 U.S. cents from 56.78 cents in New York late yesterday. It bought 55.74 yen from 55.94.

Australia’s trade surplus expanded to A$2.11 billion ($1.47 billion) in February as gold exports, the nation’s third most- valuable raw material export surged, the Bureau of Statistics said in Sydney today. The median estimate of 18 economists surveyed by Bloomberg News was for A$700 million.

The Aussie will likely trade between 68.50 U.S. cents and 70.50 cents while New Zealand’s dollar will trade between 55.50 U.S. cents and 57 cents, said Danica Hampton, a currency strategist at Bank of New Zealand Ltd. in Wellington.

‘An Anomaly’

“Rising interest rates and a rising dollar are going to make it a bit more difficult for New Zealand to get through the bottom of this recession and out the other side,” English said today in an interview with Radio New Zealand. “If we are in the bottom of a sharp recession, then rising interest rates and a rising currency are a bit of an anomaly.”

A lower currency would bolster exports, which make up 30 percent of the economy, English said. New Zealand’s dollar surged 12 percent in March against the greenback, its biggest advance since 1985.

Gains in the two currencies may be limited before the ECB announcement and a meeting in London of the group of 20 largest developed and emerging nations, where leaders will discuss tighter regulation for financial markets.

“The near-term outlook for New Zealand is undeniably ugly and further rate cuts from the Reserve Bank of New Zealand are likely in coming months, which will weigh on the currency,” said Hampton. “People are largely sitting on the sidelines ahead of the G20 and ECB meeting and the U.S. dollar will probably remain firm.”

Benchmark Interest Rates

Benchmark interest rates are 3.25 percent in Australia and 3 percent in New Zealand, compared with 0.1 percent in Japan and as low as zero percent in the U.S., attracting investors to the South Pacific nations’ higher-yielding assets. The risk in such trades is that currency market moves will erase profits.

Australian government bonds were unchanged with the yield on 10-year notes at 4.39 percent, according to data compiled by Bloomberg. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, rose to 3.70 percent from 3.67 percent yesterday.

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

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Korea Won Gains Most in Week on Stock Market Rally; Bonds Drop

By Kim Kyoungwha

April 2 (Bloomberg) -- South Korea’s won strengthened the most in a week as a global stocks rally helped revive risk appetite, spurring demand for emerging-market assets. Bonds fell.

The currency, Asia’s best performer last month, advanced for a second day and the Kospi index of local shares climbed 2 percent. U.S. equities gained after a report showed existing home sales unexpectedly increased in the world’s biggest economy and Treasury Secretary Timothy Geithner said there are “encouraging signs” of recovery in financial markets.

“A rally in global stocks is lending support to the won again,” said Ko Yun Jin, a currency dealer with Kookmin Bank, Korea’s largest lender in Seoul. “Economic indicators, coupled with foreign net purchases of stocks, are likely to propel the won even higher.”

The won appreciated 1.3 percent to 1,361.55 per dollar as of 10:03 a.m. local time, according to Seoul Money Brokerage Services Ltd. The currency, which surged 13 percent last month, is down 7.5 percent for the year.

Global funds bought more Korean shares than they sold for a second day, according to Korea Exchange. Their net purchases this year totaled 1.29 trillion won ($947 million) as of yesterday.

The Group of 20 summit convenes in London today amid signs a global recession will ease. The number of contracts to buy existing U.S. homes rose 2.1 percent in February from the previous month, the National Association of Realtors reported yesterday. Economists surveyed by Bloomberg forecast no change, after a 7.7 percent drop in January.

Korea’s foreign-exchange reserves rose in March as a weaker U.S. dollar boosted the value of the central bank’s euro- denominated assets. Reserves rose to $206.3 billion as of the end of March from $201.5 billion in February, the Bank of Korea said in Seoul today. The dollar weakened 4.9 percent versus the euro last month.

Bonds fell. The yield on the benchmark note due March 2014 rose one basis point to 4.63 percent, according to Korea Exchange. A basis point is 0.01 percentage point.

To contact the reporters on this story: Kim Kyoungwha in Beijing at kkim19@bloomberg.net

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China Boosts Yuan Swaps, Store Payments as Dollar Concern Grows

By Bob Chen and Judy Chen

April 2 (Bloomberg) -- China’s leaders, increasingly concerned about the nation’s $740 billion of U.S. Treasuries, are making it easier for trading partners and consumers to do business in yuan.

The People’s Bank of China has agreed to provide 650 billion yuan ($95 billion) to Argentina, Belarus, Hong Kong, Indonesia, Malaysia and South Korea through so-called currency- swaps. More such arrangements are being planned so importers can avoid paying for Chinese goods with dollars, the central bank said. In Hong Kong, which has pegged the currency to its U.S. counterpart since 1983, stores from Park’n Shop supermarkets to jewelers accept yuan.

Chinese officials are using the Group of 20 meeting, which begins today in London, to call for reducing the dollar’s role and the creation of a new global reserve currency. Premier Wen Jiabao has said he’s concerned that a weaker greenback will erode the value of China’s Treasuries as the U.S. tries to spend its way out of the longest recession since the 1930s.

“China has learned from this financial crisis that we must reduce reliance on the dollar and promote the yuan as a regional or international currency,” Zhang Ming, secretary general of the international finance research center at the Chinese Academy of Social Sciences said in a March 31 interview in Beijing. “We need to shield our economy from any more turmoil in the U.S.”

The yuan has risen 21 percent to 6.8343 per dollar since the central bank scrapped a fixed exchange rate in July 2005. China has limited its advance to 2.7 percent in the past year as a stronger currency made the nation’s exports less competitive at a time when the economy is growing at the slowest pace in seven years. Gross domestic product will expand 6.5 percent in 2009, from 9 percent last year, according to the World Bank.

Anxiety Increased

Wen said on March 13 that China, the world’s biggest holder of foreign exchange reserves, wants guarantees for the safety of its U.S. assets. The Fed last month announced a $1.15 trillion plan to buy Treasuries and mortgage-related bonds, boosting supply of the currency.

Anxiety increased in the past year because the dollar’s gains were driven in part by investors fleeing riskier assets after the bankruptcy of Lehman Brothers Holdings Inc. in September froze credit markets. The PBOC said March 31 its swaps were designed to help developing nations running short of dollars “cope with the current crisis.”

The Dollar Index, which the ICE uses to track the greenback against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, rallied 18 percent in the past year. It dropped 2.9 percent last month as the Fed started buying Treasuries.

Super Currency

PBOC Governor Zhou Xiaochuan asked the International Monetary Fund on March 23 to expand the use of so-called Special Drawing Rights, which are valued against a basket of currencies, and move toward a “super-sovereign reserve currency.” G-20 members Russia and Indonesia supported the proposal, which would reduce the volatility of reserves.

China and its Asian allies will adopt a “mild approach” on the plan to avoid driving down the value of U.S. investments, said Lee Chi Hun, deputy director at Korea Centre for International Finance, a Seoul-based government research agency.

“A rapid collapse in the dollar system will cause damage to those who hold the most dollar assets,” said Lee. The proposal is “a strong warning for the U.S. to protect the value of Chinese assets,” he said.

The dollar made up 64 percent of the world’s $6.71 trillion foreign-exchange reserves at the end of last year, down from 64.4 percent in September and 72.7 percent in June 2001, IMF data shows. The yuan can’t be a reserve currency because it isn’t fully convertible.

Dollar Dominance

“It’s very premature to think the U.S. dollar can be replaced,” said Diane Lin, a Sydney-based fund manager at Pengana Capital, which oversees about $1.9 billion. “The Chinese yuan will eventually become a convertible currency internationally. But we are talking about a timeframe of over five years.”

China, the world’s second-largest exporter after Germany, according to the World Trade Organization, is turning to other strategies to reduce its dependence on the U.S. currency.

Bank of China Ltd., the nation’s largest foreign-exchange lender, has started trials for the yuan settlement program in Shanghai and Hong Kong, President Li Lihui said in Beijing last month. While China allowed the currency to be used for trading goods and services in December 1996, it had to be converted before cross-border payments were made.

Controls on buying or selling yuan for investment are also being eased. The government said on Dec. 9 it will triple the amount of domestic securities that overseas funds can buy under the qualified foreign institutional investors program to $30 billion, without giving a timeframe.

Potential for Gains

“The next step will probably be to allow use of yuan in trade with more regions or nations,” said Chan Wing Kee, managing director of Hong Kong-based Yangtzekiang Garment Ltd., which makes GAP and Levi’s clothes. “I’m pretty sure the yuan has more potential to strengthen than the dollar, the euro, the pound and the yen.”

Indonesian companies will be able to buy Chinese goods using yuan for the first time after last month’s 100 billion yuan currency swap, Bank Indonesia Deputy Governor Hartadi Sarwono said yesterday in Jakarta.

“Importers don’t need to use dollars and they can directly pay their import bills with yuan,” Sarwono said. “This will reduce pressure in the dollar market and help stabilize the foreign-exchange rate.”

Hong Kong banks have been able to accept yuan deposits since 2004 and stores have increasingly welcomed payment in China’s currency since 2003, when a relaxation of visa controls led to a surge in the number of mainlanders visiting the city.

“A lot of tourists were bringing nothing but cash for purchases so we had to adapt as retailers,” said Caroline Mak, chairman of the Hong Kong Retail Management Association. “Watch, even jewelry shops, they all take yuan now.”

To contact the reporters on this story: Bob Chen in Hong Kong at bchen45@bloomberg.net; Judy Chen in Shanghai at xchen45@bloomberg.net

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Yen Falls as Rising Stocks Spur Demand for High-Yield Assets

By Ron Harui and Theresa Barraclough

April 2 (Bloomberg) -- The yen fell against the euro on speculation that gains in Asian stocks will prompt investors to increase purchases of higher-yielding assets.

The euro rose versus the dollar on optimism that European Central Bank President Jean-Claude Trichet will signal the bank will refrain from cutting interest rates further after lowering them later today. New Zealand’s dollar may decline against the greenback after Finance Minister Bill English said a stronger currency would make it difficult for the nation to snap out of its worst recession in more than three decades.

“Asian and Japanese stocks are rising, reflecting an improvement in risk appetite,” said Hideki Amikura, deputy general manager of foreign exchange in Tokyo at Nomura Trust and Banking Co., a unit of Japan’s largest brokerage. “This is leading to selling of the yen.”

The yen dropped to 131.08 per euro as of 10:43 a.m. in Tokyo, from 130.52 in New York yesterday. Japan’s currency also declined to 98.76 against the dollar from 98.53.

New Zealand’s dollar traded at 56.74 U.S. cents, from 56.78 cents yesterday. The currency earlier slipped as much as 0.7 percent following the finance minister’s comments.

The Nikkei 225 Stock Average rose 2.8 percent and the MSCI Asia-Pacific Index of regional shares advanced 2.7 percent. The Standard & Poor’s 500 Index climbed 1.7 percent yesterday.

To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net; Theresa Barraclough in Tokyo at tbarraclough@bloomberg.net

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Oil Trades Near $49 After Falling on Gain in U.S. Inventories

By Mark Shenk

April 2 (Bloomberg) -- Crude oil traded near $49 a barrel after falling yesterday as a government report showed that U.S. oil stockpiles rose to a 15-year high and gasoline supplies unexpectedly increased as the recession curbed fuel demand.

Crude-oil inventories climbed 2.84 million barrels to 359.4 million in the week ended March 27, the highest since July 1993, the Energy Department said. A 3 million-barrel increase was forecast, according to a Bloomberg News survey. Gasoline supplies rose by 2.23 million barrels to 216.8 million.

“We are swimming in crude and demand remains terrible,” said Chip Hodge, who oversees a $9 billion natural-resource- company bond portfolio as managing director at MFC Global Investment Management in Boston. “Until we see the global economy bottom or rebound, there isn’t going to be an impetus for a run-up in crude prices.”

Crude oil for May delivery rose 30 cents to $48.69 a barrel on the New York Mercantile Exchange at 9:23 a.m. in Sydney. Yesterday, futures fell $1.27, or 2.6 percent, the lowest settlement since March 18. Oil is up 8.5 percent this year and has dropped 67 percent from a record $147.27 a barrel in July.

Gasoline futures for May delivery declined 4.96 cents, or 3.5 percent, to end the session at $1.3717 a gallon in New York. It was the lowest settlement for a front-month contract since March 18.

The gain in oil stockpiles left supplies 13 percent higher than the five-year average for the period, the Energy Department said. Gasoline inventories were 2.7 percent above the average.

Fuel Inventories

Gasoline stockpiles were forecast to drop 1.5 million barrels, according to the median of 12 analyst responses in the Bloomberg survey.

Supplies of distillate fuel, a category that includes heating oil and diesel, rose 221,000 barrels to 144.2 million last week. The increase left stockpiles 28 percent higher than the five-year average.

“Crude oil supplies are almost at a 16-year high, the gasoline figure was a surprise and nobody is worried about distillate,” said Mike Zarembski, senior commodity analyst at OptionsXpress Holdings Inc. in Chicago.

Refineries operated at 81.7 percent of capacity, down 0.3 percentage point from the week before. A gain of 0.3 percentage point was forecast.

Total daily fuel demand averaged over the past four weeks was 18.9 million barrels, down 4.4 percent from a year earlier, the report showed. It was the lowest consumption for a four-week period since October.

Falling Demand

“We will need to see demand come back before there is any sustained rally in this market,” said Kyle Cooper, an analyst at energy consultant IAF Advisors in Houston. “At this point demand is still falling.”

The Organization of Petroleum Exporting Countries, the International Energy Agency and the Energy Department reduced their 2009 forecasts for oil demand in March because of the recession. They expect consumption to slump by more than 1 million barrels a day this year.

OPEC cut oil output by 1.2 percent to an average 27.395 million barrels a day last month, according to a Bloomberg News survey of oil companies, producers and analysts. The 11 OPEC members with quotas, all except Iraq, pumped 25.06 million barrels a day, 215,000 more than their target of 24.845 million.

“OPEC compliance is excellent,” said Sarah Emerson, managing director of Energy Security Analysis Inc. in Wakefield, Massachusetts. “They have a lot at stake and are doing what they have to.”

OPEC Agreement

OPEC, in a meeting March 15 in Vienna, decided against cutting production targets further because of concern higher prices might harm an ailing global economy. Ministers pledged to tighten compliance with their quotas after crude oil fell more than $100 a barrel from the July record.

“Given what we know about the economy, OPEC has probably cut enough,” said Adam Sieminski, the chief energy economist at Deutsche Bank AG in Washington. “It takes a while before we see the cuts have an impact here.”

Brent crude oil for May settlement fell 79 cents, or 1.6 percent, to end the session at $48.44 a barrel on London’s ICE Futures Europe exchange.

The Group of 20 summit will start tomorrow as world leaders attempt to reach an agreement to stabilize their economies in the midst of the global recession.

“Crude oil will probably drift lower, even with OPEC making cuts, until the economy improves,” said Sean Brodrick, natural resource analyst with Weiss Research in Jupiter, Florida.

U.S. stocks advanced as sales of existing homes unexpectedly increased and a manufacturing gauge topped economists’ estimates, overshadowing concern General Motors Corp. will file for bankruptcy.

The Standard & Poor’s 500 Index increased 1.1 percent to 806.61. The Dow Jones Industrial Average rose 114.05, or 1.5 percent, to 7,722.97.

To contact the reporter on this story: Mark Shenk in New York at mshenk1@bloomberg.net

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China Posts World’s Only Stock Gains After Lehman: Chart of Day

By Michael Patterson

April 2 (Bloomberg) -- China is the only country worldwide where stock investors are more optimistic than on Sept. 15, the day Lehman Brothers Holdings Inc.’s bankruptcy shattered confidence in the global financial system.

The CHART OF THE DAY shows the Shanghai Composite Index rising 16 percent since Sept. 15. The gain is the only among 70 major equity benchmarks tracked by Bloomberg even after global stocks posted their best monthly rally since 2003 in March. The index of China’s so-called A shares, which are traded almost exclusively by local investors, beat benchmarks in the world’s five other biggest markets by at least 39 percentage points in the period.

The Shanghai index fell as much as 18 percent in the two months after Lehman’s bankruptcy, tracking declines in equities worldwide on concern bank failures would spur a global recession and hurt demand for manufactured goods. Chinese stocks rebounded since November, pushing the Shanghai gauge to a seven-month high yesterday on speculation the government’s 4 trillion yuan ($586 billion) stimulus plan will offset a record drop in exports.

“Mr. Market is telling us that it’s highly possible the regime can switch the economy from exporting Barbie dolls to America, to stimulating its own domestic economy,” said Robin Griffiths, who helps oversee about $15 billion as the chief technical strategist at Cazenove Capital in London.

Lehman, once the fourth-biggest U.S. investment bank, was forced into bankruptcy after losses on mortgage securities drove away lenders and potential suitors. The New York-based company’s collapse sparked a freeze in global credit markets as banks hoarded cash.

To contact the reporter on this story: Michael Patterson in London at mpatterson10@bloomberg.net.

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BHP, PetroChina, San Miguel: Asia Ex-Japan Equity Preview

By Ian C. Sayson

April 2 (Bloomberg) -- The following companies may have unusual price changes in Asia trading, excluding Japan. Stock symbols are in parentheses, and share prices are from the previous close, unless noted otherwise.

Bank of the Philippine Islands (BPI PM): The nation’s third-largest bank by assets said in a stock exchange filing it’s “optimistic” profit will improve this year. BPI, as the bank is also called, was unchanged at 34 pesos.

BHP Billiton Ltd. (BHP AU): The world’s largest mining company was given 12 notices to stop operations in the past two weeks after the Western Australian state government said the world’s largest mining company needed to improve its safety record. Five workers have died in the past eight months. BHP shares advanced 0.6 percent to A$32.10.

China Oilfield Services Ltd. (2883 HK): The unit of the nation’s largest offshore oil producer posted a 39 percent increase in profit last year to 3.1 billion yuan ($454 million) on higher crude prices. That’s less than the 3.3 billion yuan median estimate in a Bloomberg survey of analysts. The stock climbed 3.1 percent to HK$6.32.

Farglory Land Development Co. (5522 TT): Taiwan’s largest property developer said it wrote off NT$704 million ($21 million) of the value of its stake in Far Glory Life Insurance Co. The stock increased 7 percent to NT$29.05.

Hana Financial Group Inc. (086790 KS): Hana Bank, South Korea’s fourth-largest lender, may double a bond sale to $1 billion after meeting investors in the U.S., Asia and Europe, according to a person with direct knowledge of the plan. Hana Financial, which owns the bank, climbed 4.1 percent to 21,650 won.

New Asia Construction & Development Corp. (2516 TT): The Taiwanese contractor said it won a NT$2.33 billion tender to construct a tunnel and bridge expressway in Taiwan’s north east. The stock rose 6.9 percent to NT$6.63.

PetroChina Co. (857 HK): The company’s biggest refinery, in northern China’s Dalian city started processing high-sulfur Sudan crude to reduce cost, its parent China National Petroleum Corp. said. PetroChina, the nation’s largest oil producer, fell 1.1 percent to HK$6.11.

Shinhan Financial Group Co. (055550 KS): Shinhan Bank, South Korea’s second-biggest, is in discussions with other lenders to set up the country’s first private “bad bank” to hold their troubled assets, Chief Executive Officer Lee Baek Soon said. Shinhan Financial, which owns the bank, rose 4.7 percent to 25,750 won.

San Miguel Corp. (SMC PM): The largest Philippine food and drinks company may delay a planned initial share sale this year in its packaging business until 2010, President Ramon Ang said. The company’s Class A shares, which are reserved for Filipinos, rose 2.9 percent to 52.50 pesos. Its Class B shares (SMCB PM), which have no ownership restrictions, climbed 2.9 percent to 53.50 pesos.

South China Resources Inc. (SOC PM): The Philippine explorer said its venture with Pitkin Petroleum Ltd. won a $7 million oil exploration contract from the Southeast Asian nation’s energy department. The stock decreased 7.1 percent to 1.30 pesos when the stock last traded on March 27. Philex Mining Corp. (PX PM), which owns shares in Pitkin, was unchanged at 5.60 pesos.

Sumatec Resources Bhd. (SMTC MK): The Malaysian engineering group and its partner EC Chemical Bio Co. won a $70.6 million contract to build a bio-ethanol plant in Thailand. Sumatec gained 9.4 percent to 17.5 sen.

To contact the reporter on this story: Ian C. Sayson in Manila at isayson@bloomberg.net

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Japan Stocks Advance on Recovery Indicators; Toyota Set to Rise

By Masaki Kondo

April 2 (Bloomberg) -- Japanese stocks rose for a second day as better-than-expected indicators in the U.S. stoked speculation the world’s biggest economy is recovering.

Mitsubishi Motors Corp. climbed 2.3 percent after the U.S. Institute for Supply Management’s manufacturing gauge rose for a third month. Toyota Motor Corp., the world’s largest automaker, was set to rise on its narrower-than-estimated decline in U.S. sales. Mizuho Trust & Banking Co. climbed 2.1 percent after U.S. Treasury Secretary Timothy Geithner said there are “encouraging signs” in the financial market.

The Nikkei 225 Stock Average climbed 107.16, or 1.3 percent, to 8,459.07 as of 9:03 a.m. in Tokyo. The broader Topix index rose 9.65, or 1.2 percent, to 803.47.

“People have started to shrug off negative factors and focus on signs of recovery,” Juichi Wako, a strategist at Tokyo-based Nomura Securities Co., said in an interview with Bloomberg Television. “The ISM index has a high correlation with Japan’s factory output, and the gauge’s improvement points to less severe sales drop for Japanese manufacturers.”

The Nikkei climbed 7.2 percent in March, narrowing this year’s loss to 5.7 percent, as confidence grew in central banks’ efforts to stem a shortage of credit. Still, two-thirds of the Nikkei’s members trade at below their corporate net worth, according to Bloomberg data.

The Standard & Poor’s 500 Index climbed in New York, bringing its two-day advance to 3 percent. The Institute for Supply Management yesterday said its factory index increased to 36.3 last month from 35.8 in February. A gauge of U.S. pending home resales rose 2.1 percent in February from January, the National Association of Realtors said. Economists had estimated the index would be unchanged.

‘Encouraging Signs’

“You’re seeing encouraging signs of improvement in our markets,” Geithner said yesterday in a Bloomberg Television interview. He accompanied President Barack Obama to London for Group of 20 meetings.

Toyota posted a 39 percent drop in U.S. sales last month, narrower than an estimated 41 percent tumble. Sales at Honda Motor Co. and Nissan Motor Co. fell 36 percent and 38 percent respectively, whereas analysts had projected a 42 percent slump for both companies.

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

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Asian Stocks Rise on Growth Optimism; Bank Shares Lead Gain

By Darren Boey

April 2 (Bloomberg) -- Asian stocks rose, led by banks and mining companies, as better-than-expected economic reports in the U.S. stoked speculation global growth is recovering.

The MSCI Asia Pacific Index gained 1.7 percent to 83.74 at 9:11 a.m. in Tokyo, extending yesterday’s 1.7 percent increase.

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Euro to Drift Weaker

Daily Forex Fundamentals | Written by Investica | Apr 01 09 10:37 GMT |

There is a strong probability that the ECB will cut benchmark interest rates again on Thursday. A cut is priced in and should only weaken the Euro marginally in an immediate reaction. The Euro will, however, weaken sharply if the ECB announces a move to a quantitative easing. There will also be persistent fears over internal Euro-zone stresses. Given these fears, there is likely to be a reduction in long positions and the Euro is likely to trade with a softer bias into Thursday's ECB meeting. A retreat towards 1.3120 against the dollar is realistic over the next 24 hours. The flash Euro-zone inflation rate fell sharply to 0.6% in March from 1.2% previously in data reported on Tuesday. The Wednesday data releases were also generally weak with German retail sales falling in the latest month while the final PMI index weakened marginally from the flash reading. In addition Euro-zone unemployment rose to 8.5% from a revised 8.3% previously. There is still a very strong probability that the ECB will cut interest rates at Thursday's council meeting with the probability of 0.50% decline to a new record low of 1.00%. Any comments on non-conventional policy measures will continue to have an important impact on Euro sentiment. A move to buying corporate bonds would be likely to undermine the currency sharply while the Euro will tend to gain support if the ECB resists the pressure. G20 uncertainties, allied with uncertainty over the US auto sector is also likely to unsettle the Euro, but with heavy selling resisted. 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.

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Technical Analysis Daily

Daily Forex Technicals | Written by iFOREX.bg | Apr 01 09 10:30 GMT |

USD/JPY 99.16 - 1 April USD/JPY Open 98.98 High 99.42 Low 97.86 Close 98.94 After Dollar/Yen broke 98.14 and managed to reach 99.42, it returned for second test to the 98.15 support level, as according to indicators the currency couple is in the overbought zone. It is possible for the USD/JPY to renew its ascending movement with targets towards the 100.65 channel, if it fails to break the above support. However, it is quite possible to see correction towards 97.65 level before the currency couple climbs to 101.80. All this can happen unless Dollar reaches 96.70 against the Yen. Trading range is between 90.10 and 102.50. General trend is still descending, till 102.50 remains untouched, with targets 85.00, followed by 82.80. Technical resistance levels: 99.45 100.60 101.80 Technical support levels: 97.65 96.60 94.75 Trading range: 99.30 - 98.65 Trend: Downward Sell at 99.16 SL 99.46 TP 98.76 iFOREX.bg Forecasts and Trading Signals http://www.zifx.com

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G7 Forex Report

Daily Forex Technicals | Written by The Traders Club | Apr 01 09 10:26 GMT |

EUR/USD Weekly Trend direction: Bearish Weekly trend reversal level: 1.3740 Key G7 resistance levels: 1.3350, 1.3428, 1.3480 Counter-trend opportunities: Strategy: Whilst below the weekly trend reversal level, sell rallies to resistance levels after an entry signal. Today's trade suggestion: Little change since Monday, and the strategy remains the same: More drama on Friday, as the euro sold off sharply later in the session. This has formed a perfect weekly “tweezers top” and very close to a “dark cloud cover”. Because of this, we have reversed the weekly direction to short, with the reversal level at the top of the tweezers at 1.3740. We now look to sell the euro on rallies, with the strongest resistance at 1.3350 (the 38.2% Fibonacci retracement level and the previous support. There are other lesser resistance levels either side at 1.3380 and 1.3480. Watch and wait for a clear G7 entry signal before selling, with a target of 1.3200 and then the key 1.3000 level. Update: No change. 1.3350 entry level was perfect for 150 pips profit Summary: Sell rallies to the resistance levels above only after a clear G7 entry signal. Target 1.3200 and then 1.3000 EUR/USD Hourly chart: EUR/USD Weekly chart: GBP/USD Weekly Trend direction: Bearish Weekly trend reversal level: 1.4780 Key G7 resistance levels: 1.4360/1.4400, 1.4440, 1.4520 Counter-trend opportunities: Strategy: Whilst below the weekly trend reversal level sell rallies to resistance levels after an entry signal. Today's trade suggestion: The pound has actually broken below the weekly reversal level in the past few hours and has turned bearish overnight. We are at the key 1.4200 support (50% of the recent rally) which has provided somewhat of a barrier to the continued down-move so far. There is a counter-trend opportunity here, to buy at or near 1.4200 ONLY AFTER A CONFIRMATION to buy from a G7 signal. Use small positions and buy for a target of 1.4430. Then look to sell the pound either here or at 1.4500 to go with the main bearish trend back down to 1.4200 and then 1.4000. Update: Unchanged. Resistance at 1.4362 triggered a perfect sell entry Summary: Sell rallies to resistance levels after a G7 confirmation. Target 1.4200. GBP/USD Hourly chart: GBP/USD Weekly chart: USD/JPY Weekly Trend direction: Bullish Weekly trend reversal level: 95.40 Key G7 support levels: 97.00, 96.20, 95.50 Counter-trend opportunities: Strategy: Whilst above the weekly trend reversal level, buy dips to support levels after an entry signal Today's trade suggestion: Quite mixed up, but the reality is that we have been trapped in a range between 96.00 and 100.00 (most of the time) for over a month. The last two week's weekly candles have a distinct bullish look to them, with a “spike low” two weeks ago, followed by a sort of “bullish engulfing” candle last week. For this reason, we have decided to go with the long direction, with the weekly reversal level below last week's candle low at 1.9540. Look to buy the dollar on dips, with support at 97.00 (key) and then 96.20 and 95.50 (the weekly trend reversal level) Target for long trades is 99.00 and then 100.00. If and when we do reach 100.00, the resulting breakout higher should be convincing. Update: Unchanged, with the dip to 96.20 providing a perfect bounce back to 98.20 (at time of writing. Next stop 99.00, then 100.00 Summary: Buy dips to supports after a reversal signal. Target 99.00 and then 100.00. USD/JPY Hourly chart: USD/JPY Weekly chart: The Traders Club http://www.thetradersclub.com

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