Hyundai Steel Advances After Profit Beats Analysts’ Estimates

By Shinhye Kang and Saeromi Shin

July 29 (Bloomberg) -- Hyundai Steel Co., South Korea’s biggest maker of construction steel, rose to the highest in almost a year in Seoul trading after reporting a better-than- expected second-quarter profit.

Hyundai Steel jumped as much as 5 percent to 67,100 won, the highest since Aug. 4, 2008. It traded at 67,000 won at 10:57 a.m. local time. The benchmark Kospi index dropped 0.2 percent.

Net profit rose more than five-fold to 283.3 billion won ($228 million) in the three months ended June 30 from the previous three months, the Incheon-based company said yesterday. The profit compares with the 126.7 billion won median estimate of 8 analysts surveyed by Bloomberg. Hyundai Steel also said government spending may spur demand in the second half.

Morgan Stanley lifted its share-price estimate to 78,700 won from 69,500 won and maintained its “overweight” rating, according to a report today by analysts including Hyunjae Lee.

“We expect rebar demand to turn more favorable in the fourth quarter thanks to government-led construction projects and less pricing pressure from Chinese imports,” the brokerage said. Rebar, short for reinforcing bar, is used to strengthen concrete.

To contact the reporters on this story: Shinhye Kang in Seoul at skang24@bloomberg.net; Saeromi Shin in Seoul at sshin15@bloomberg.net

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Rubber Slumps 4.1% on Speculation Price Rally May Weaken Demand

By Jae Hur and Aya Takada

July 29 (Bloomberg) -- Rubber slumped by as much as 4.1 percent amid speculation demand for the commodity used to make tires may slow after prices jumped to the highest in more than eight months.

Futures in Tokyo declined after gaining 22 percent in the previous 10 days. The 14-day relative strength index for rubber futures, a gauge of momentum, climbed above 70 this week, a level signaling prices may decline.

“Rubber futures went up too much,” Shuji Sugata, research manager at Mitsubishi Corp. Futures & Securities Ltd., said today in a phone interview. “The price appears to have achieved its target level of around 190 yen, where some investors want to cash in.”

Rubber for January delivery settled at 181.9 yen a kilogram ($1,932 a metric ton) on the Tokyo Commodity Exchange, down 3.8 percent from its settlement yesterday. The new benchmark contract touched 190.1 yen on its debut yesterday, the highest intraday price since Nov. 10.

A drop in crude oil prices also put pressure on rubber futures, making the synthetic rival more attractive than natural rubber, Sugata said.

Crude oil for September delivery fell 1.7 percent to $66.06 a barrel at 4:31 a.m. in Tokyo. Oil dropped for the second day after U.S. equities fell and a report showed increased crude supplies in the world’s biggest energy consuming nation.

Thailand, Indonesia and Malaysia, the three-largest rubber producers, may deepen a planned supply reduction this year as the recession curbs consumption, Abdul Rasip Latiff, chief executive officer of the International Rubber Consortium Ltd., said July 26.

The three producing countries will cut shipments by as much as 48,000 tons a month in the second half, Latiff said July 15. The trio reduced exports by 540,000 tons in the first five months of the year, more than the 414,000 ton reduction planned for the first half, he said.

Rubber for January delivery on the Shanghai Futures Exchange, the most-active contract, added 0.1 percent to 17,800 yuan ($2,606) a ton.

To contact the reporters on this story: Jae Hur in Singapore at jhur1@bloomberg.net; Aya Takada in Tokyo atakada2@bloomberg.net.

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Gold Little Changed as Dollar Advance Cools Safe-Haven Demand

By Kim Kyoungwha

July 29 (Bloomberg) -- Gold was little changed, reversing earlier gains, as a rising U.S. currency reduced the appeal of raw materials priced in dollars.

Bullion rose earlier after U.S. stocks fell yesterday as consumer confidence trailed projections and companies posted worse-than-expected results, fueling safe-haven demand for the precious metal. Gold tumbled by the most since June 5 yesterday as the Dollar Index, a six-currency gauge of the greenback’s value, rebounded from a 2009 low.

“If the dollar keeps rising, that would undermine gold prices further but at this point of time, it’s fairly neutral outlook for gold,” said Toby Hassall, a research analyst with Commodity Warrants Australia. “The dollar’s strength will be the primary driver at this point.”

Gold for immediate delivery fell 0.2 percent to $935.35 an ounce at 3 p.m. in Singapore. The metal is up 6.2 percent this year. The dollar weakened to $1.4187 against the euro from $1.4167 yesterday.

Gold holdings in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, fell 3.36 metric tons to 1,083.25 tons as of July 28, according to the company’s Web site.

Still, “with daily momentum rolling over, we look for further downside in the sessions ahead” toward the low of a range between $905 and $960, Barclays Capital said in a report yesterday. The brokerage expects gold to rise above $1,033 an ounce in the final quarter of 2009.

Separately, South African gold producers agreed to boost workers’ pay by between 9 percent and 10.5 percent this year, concluding negotiations, the Chamber of Mines said in an e- mailed statement yesterday.

Among other precious metals for immediate delivery, silver was down 0.8 percent at $13.62 an ounce, platinum was down 0.7 percent at $1,192.75 an ounce and palladium was down 1.3 percent at $257.25.

To contact the reporter on this story: Kyoungwha Kim in Singapore at Kkim19@bloomberg.net

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BHP Agrees on New Iron Ore Pricing System for 30% of Customers

By Rebecca Keenan and Jesse Riseborough

July 29 (Bloomberg) -- BHP Billiton Ltd., the world’s largest mining company, agreed to sell 30 percent of its iron ore under new pricing mechanisms, signaling a break with the 40- year-old tradition of settling annual contracts in Asia.

This ore will be sold through a mix of cash, quarterly and indexed pricing, Melbourne-based BHP said today in a statement. About 23 percent will be sold under fixed-price contracts at 33 percent less than last year’s price and talks for the remaining 47 percent of volumes are continuing, it said.

Chief Executive Officer Marius Kloppers has been pushing for an end to the annual pricing system and is selling more ore on the cash market after prices soared this decade on demand from China, the biggest buyer. Talks between China and Rio Tinto Group, which has four executives detained by Chinese authorities for allegedly spying, have stalled over the size of a price cut.

“It is going from the silly archaic annual benchmark method to something more sophisticated,” Tom Price, a commodities analyst at Merrill Lynch & Co. in Sydney, said today by phone. “It was never going to happen instantly overnight, it was always going to be a transitional thing.”

BHP declined 1.6 percent to A$37.43 at the 4:10 p.m. Sydney time close on the Australian stock exchange. That compares with a 2.4 percent drop in Rio Tinto and a 0.6 percent drop in the benchmark index.

‘Practically Dead’

Kloppers said in May the annual benchmark system was “practically dead,” according to a report from Bank of America’s Merrill Lynch & Co. unit. Goldman Sachs JBWere Pty and Morgan Stanley have both said producers may agree to more flexible contract pricing, including quarterly revisions, to help end this year’s deadlock in talks with Chinese steel mills.

“The company believes that current settlements are indicative of continued progress towards transparent market pricing,” BHP said in the statement. BHP didn’t specify which customers had agreed to the different pricing mechanisms.

The 33 percent price cut agreed for contract prices matches the accord settled in May between Rio, the world’s second- largest iron ore exporter, and mills in Japan and South Korea. Chinese steel mills have been insisting on a contract price cut of as much as 45 percent.

The spot price for Australian ore at a grade of 62 percent of iron has gained 56 percent since the first quarter and traded unchanged at $91.90 a ton yesterday, the highest this year, according to The Steel Index. This includes freight charges of about $13.50 a ton for shipping ore to China from Australia. The Australian contract price this year is about $61 a ton. Rio, BHP and Brazil’s Vale SA are the world’s three largest exporters.

‘Big Change’

“This is a big change,” Mark Pervan, head of commodity research at Australia and New Zealand Banking Group Ltd., said today by phone from Melbourne. “It is certainly going to devalue” the benchmark system or make it less relevant, he said.

Chinese mills are still in talks with BHP, Rio and Vale, said Jiangsu Shagang Group Co. Chairman Shen Wenrong. Shan Shanghua, general secretary of the China Iron and Steel Association, didn’t comment when reached on the phone today. Qi Xiangdong, deputy secretary general, said he couldn’t comment on price talks.

Nippon Steel Corp. spokesman Hayato Uchida said: “The company doesn’t coment on individual price talks.” Posco, Korea’s biggest steelmaker, is still in talks with BHP, spokeswoman Choi Youn Joung said today.

To contact the reporters on this story: Rebecca Keenan in Melbourne at rkeenan5@bloomberg.net; Jesse Riseborough in Melbourne at jriseborough@bloomberg.net.

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China Stocks Plunge Most in 8 Months; Jiangxi Copper Falls

By Bloomberg News

July 29 (Bloomberg) -- China’s stocks plunged the most in eight months on concern this year’s rally has outpaced prospects for earnings growth, overshadowing a debut trading surge for China State Construction Engineering Corp..

Jiangxi Copper Co. dropped 6.5 percent, paring its annual advance to 339 percent, after saying first-half profit fell. China Cosco Holdings Co. the world’s largest operator of dry- bulk ships, slid 7.5 percent as it forecast a loss. State Construction jumped 60 percent after the world’s largest initial public offering in 16 months.

The Shanghai Composite Index lost 170.88, or 5 percent, to 3,267.5 as of 2:42 p.m., set for its biggest decline since Nov. 18 and snapping a five-day, 7 percent advance. The gauge has almost doubled from last year’s low as government stimulus spending, record bank lending and an economic rebound spurred demand for equities. The CSI 300 Index, measuring exchanges in Shanghai and Shenzhen, slid 4.5 percent to 3,588.78.

The “whole market is facing increasing risks as valuations are getting more expensive,” said Yan Ji, who helps oversee about $850 million of investments at HSBC Jintrust Fund Management Co. in Shanghai.

The Shanghai Composite has gained 81 percent this year, the world’s second-best performing stock market, after slumping 65 percent in 2008. The index, which doubled in 2006 and 2007, remains 53 percent below its peak of October 2007.

Stocks on the Shanghai index trade at 35.7 times earnings, the highest since January 2008 and more than twice the 17 times fetched by the MSCI Emerging Markets Index.

Earnings Forecasts

Jiangxi Copper, the nation’s biggest producer of the metal, sank 6.4 percent to 43.80 yuan. It’s the sixth best performer on the index this year. The company said first-half profit may fall from a year earlier as prices declined amid the global recession.

China Cosco lost 7.5 percent to 17.71 yuan, the most since Feb. 18. The company said it expects to post a net loss for the first half because international trade was severely affected.

Lower commodity prices also spurred declines by materials producers. Aluminum Corp. of China Ltd., the nation’s biggest maker of the lightweight metal, lost 6 percent to 17.75 yuan, set for its largest decline in five months. Zijin Mining Group Co., the country’s biggest gold producer, slid 5.8 percent to 11.17 yuan.

A gauge of six metals in London slipped 1.2 percent yesterday, the first decline in 12 days. Copper fell the most in two weeks.

Sichuan Expressway Co., the first company to list shares on the Shanghai stock market after a nine-month suspension on IPO share sales, plunged by the 10 percent daily cap for a second day to 8.83 yuan. The stock more than tripled on the first day of trading on July 27.

State Construction

State Construction, the nation’s largest housing contractor, jumped 60 percent to 6.70 yuan. The IPO values State Construction at 51.3 times 2008 earnings, the company said.

“I can tell you no institutions are getting at these levels, the valuation is just crazy,” said Chris Tang, chief investment officer at Marco Polo Pure Asset Management in Hong Kong, which oversees about $120 million. “Traditionally IPOs make money, so retail investors are going to try their luck. It’s going to remain hot for a while.”

State Construction’s 50.2 billion yuan sale is the biggest in China since PetroChina Co. raised 66.8 billion yuan in October 2007, and the largest globally since Visa Inc.’s $19 billion IPO in March last year. China International Capital Corp. was the sole underwriter.

--Zhang Shidong. With assistance from Chua Kong Ho in Shanghai. Editors: Richard Frost, Linus Chua

To contact Bloomberg News staff for this story: Zhang Shidong in Shanghai at +86-21-6104-7014 or szhang5@bloomberg.net

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Asian Stocks Fall on Lower Commodity Prices, Earnings Reports

By Patrick Rial and Jonathan Burgos

July 29 (Bloomberg) -- Asian stocks fell for the first time in 12 days as lower commodity prices and disappointing profit reports raised concern the rally had made equities expensive relative to earnings prospects.

Jiangxi Copper Co. slumped 5.9 percent in Shanghai as it forecast a drop in profit and prices of the metal slumped. China Petroleum & Chemical Corp., Asia’s biggest oil refiner, sank 4.3 percent in Hong Kong as the Chinese government cut gasoline prices. Shimano Inc., Japan’s No. 1 maker of bicycle components, and DeNA Co., which operates auction Web sites, slumped more than 5 percent on lower earnings.

The MSCI Asia Pacific Index lost 0.6 percent to 109.92 as of 2:57 p.m. in Tokyo, with almost two stocks falling for each one that rose. The gauge had climbed 13 percent in the past 11 days, the longest winning streak since January 2004. The rally took average company valuations to the highest since March 30.

“Investors are getting more selective now since equities are no longer cheap,” said Manpreet Gill, Asian strategist at Barclays Wealth, which has $238 billion in assets. “A further correction is possible.”

Hong Kong’s Hang Seng Index slumped 1.6 percent, while China’s Shanghai Composite Index sank 2.5 percent. China Cosco Holdings Co., the world’s biggest operator of dry-bulk ships, sank 5.2 percent in Hong Kong after forecasting a loss.

Japan’s Nikkei 225 Stock Average added 0.3 percent. JFE Holdings Inc., Japan’s second-largest steelmaker, and Hitachi Ltd., the country’s biggest manufacturer, climbed more than 3 percent on brokerage upgrades. China State Construction Engineering Corp. jumped 62 percent on its first day of trading in Shanghai, while BBMG Corp., the biggest cement supplier in Beijing, surged 60 percent in its Hong Kong debut.

Consumer Confidence

Futures on the Standard & Poor’s 500 Index lost 0.3 percent. The gauge fell 0.3 percent yesterday after the Conference Board’s index of U.S. consumer confidence slid to 46.6 in July, compared with the 49 projected by economists.

The report caused commodity prices to decline. A gauge of six metals in London sank 1.2 percent yesterday, the first decline in 12 days. Copper fell the most in two weeks, while crude oil retreated 1.7 percent to $67.23 a barrel in New York, the first drop in four days.

Jiangxi Copper, China’s largest producer of the metal, lost 5.9 percent to 44.03 yuan in Shanghai after saying first-half profit may fall between 57 percent and 64 percent from a year earlier. Rio Tinto Group, the world’s No. 3 mining company, slumped 2.3 percent in Sydney to A$58.06.

Lower Prices

China Petroleum, commonly known as Sinopec, fell 4.3 percent to HK$6.83. China’s government cut prices on gasoline and diesel by at least 3.3 percent, reversing a trend of rising ceilings. Lower prices reduce profit margins for refiners.

Shimano slumped 5 percent to 3,650 yen after profit fell 48 percent in the first half of the year. DeNA tumbled 9.1 percent, the MSCI Asia Pacific Index’s biggest decline, to 289,700 yen after first-quarter net income dropped by 26 percent. KBC Securities Japan downgraded the stock to “sell,” saying the company’s results had “disappointed.”

In Hong Kong, China Cosco sank 5.2 percent to HK$11 after saying it expects to post a net loss for the first half of 2009 because the global recession hurt international trade.

Analysts have boosted estimates since the beginning of April for companies in Asia outside Japan, according to data compiled by Bloomberg. Profit forecasts have actually declined within Japan, the data show.

Japanese Production

The MSCI Asia Pacific Index rallied 57 percent through yesterday from a more than five-year low on March 9 on rising confidence the worst of the global recession has passed. A government report tomorrow may show Japan’s manufacturers increased production for a fourth month in June, capping the largest quarterly output expansion in more than 50 years.

Federal Reserve Bank of San Francisco President Janet Yellen said yesterday the U.S. economy is showing the “first solid signs” of emerging from the recession and should resume growth later this year.

Companies in the MSCI Asia traded at an average 24.7 times estimated profit as of yesterday, the highest since March 30, as investors bet earnings will recover. The ratio compares with 16.3 times for the Standard & Poor’s 500 Index.

JFE, the steelmaker that yesterday forecast a return to profit, rose 3.7 percent to 3,680 yen. Takashi Enomoto, an analyst at Bank of America Corp.’s Merrill Lynch & Co. unit, boosted his target price on the stock as exports to China are rising and the shares look cheap based on estimated earnings.

Steelmakers Advance

Hyundai Steel Co., South Korea’s biggest maker of construction steel, advanced 4.5 percent to 66,800 won. The company reported second-quarter profit that beat analyst estimates on a stronger won and lower costs.

The “market environment may improve in the second half, helped by increasing demand from the public sector and seasonal demand,” the company said in an e-mailed statement.

Hitachi climbed 5.1 percent to 308 yen. The company reported a 50 billion yen ($529 million) operating loss yesterday, which Nomura Holdings Inc. analyst Masaya Yamasaki said was likely better than the company’s own projection. The shares were boosted to “overweight” at JPMorgan Chase & Co.

“Companies have moved at a surprisingly fast speed to bring down costs, which is being reflected in higher earnings,” said Takeshi Osawa, a senior fund manager in Tokyo at Norinchukin Zenkyoren Asset Management Co., which oversees about $10 billion.

China State Construction, the nation’s biggest homebuilder, jumped 62 percent to 6.76 yuan on its first trading day in Shanghai. The 50.2 billion yuan ($7.3 billion) raised in the initial sale was the world’s largest initial public offering in 16 months.

BBMG rallied 60 percent to HK$10.20. It raised HK$5.95 billion ($767.7 million) in Hong Kong’s second-biggest public offering this year.

To contact the reporter for this story: Patrick Rial in Tokyo at prial@bloomberg.net; Jonathan Burgos in Singapore at burgos4@bloomberg.net.

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Deutsche Bank Fixed-Income Trading Drops, Weighing on Earnings

By Elena Logutenkova and Aaron Kirchfeld

July 29 (Bloomberg) -- Deutsche Bank AG, once the second- biggest trading firm behind Goldman Sachs Group Inc., reined in risk-taking and lost market share during the second quarter, casting a pall on the German bank’s earnings prospects.

A 32 percent drop in fixed-income revenue eroded results for the sales and trading unit, the Frankfurt-based company reported yesterday. Led by Anshu Jain, the business generated 3.48 billion euros ($4.93 billion) buying and selling stocks, bonds, commodities and currencies in the period, down from 4.03 billion euros in the first quarter. The figures missed analysts’ estimates and trailed four of the bank’s largest rivals, including Zurich-based Credit Suisse Group AG.

The decline reflects management’s “discipline” in curtailing risks and shedding unwanted assets, Deutsche Bank Chief Financial Officer Stefan Krause said yesterday. Investors reacted to the results and a seven-fold increase in provisions for bad loans by sending the stock down the most in four months in Frankfurt trading.

“Deutsche Bank remains a powerhouse in fixed income, but the question investors are asking now is whether the ability to monetize this has been reduced,” said Huw van Steenis, a London-based analyst at Morgan Stanley. “As Deutsche bank de- risked, it also crimped earnings power.”

Shares of the bank fell 11 percent to 46.09 euros yesterday, the deepest slump since March 30. The decline trimmed this year’s gain to 68 percent, the eighth-biggest on the Bloomberg index of 63 European financial companies.

Ceding Ground

Under Chief Executive Officer Josef Ackermann, Deutsche Bank avoided taking government aid after booking fewer losses and writedowns during the global credit contraction than competitors such as Citigroup Inc. and JPMorgan Chase & Co., both in New York. The German firm captured a larger share of the trading market in 2007 as subprime mortgage delinquencies and sinking asset values hurt rivals’ earnings and depleted their capital.

The crisis depressed results across the industry last year, and Deutsche Bank has since lost ground in the business that is its biggest revenue producer, contributing almost half of total income from January through June. Jain’s sales and trading unit slipped to fifth place by revenue among the largest investment banks this year from second in 2006 and 2007, data compiled by Bloomberg show.

The 10 biggest investment banks collected almost $73 billion from sales and trading in 2007, and Deutsche Bank reaped 26 percent of that, according to company reports and Bloomberg data. Its portion shrank to 12 percent in the first half of this year, the same level as in 2006.

Credit Suisse

Credit Suisse increased its share through June to almost 13 percent from 9 percent in 2006. The Swiss bank was the fourth- biggest trader by revenue this year, up from seventh before the crisis.

Deutsche Bank’s co-head of credit trading, Boaz Weinstein, left the bank this year to start a hedge fund. The global head of distressed-debt trading, Martin Dent, also departed, along with Julian Nichols, who ran the business in Europe.

The firm’s investment bank, overseen by Jain, 46, and the 52-year-old Michael Cohrs, posted pretax profit of 828 million euros in the second quarter after a loss a year earlier, the company said yesterday. Analysts had estimated the securities unit would deliver 1.08 billion euros. Firmwide, net income rose 68 percent to 1.09 billion euros.

Credit Suisse said last week that second-quarter profit rose 29 percent to 1.57 billion Swiss francs ($1.47 billion) as sales and trading revenue more than doubled to 5.37 billion francs.

‘Cleaner and Better’

“Credit Suisse earnings remained resilient despite shrinking risks,” van Steenis said. “In contrast, Deutsche Bank was more impacted by taking risk out of the business.”

Deutsche Bank’s global markets division produced debt trading income of 2.6 billion euros, below analysts’ estimates. That compares with 602 million euros a year earlier, after 2.1 billion euros in markdowns. Equity trading generated 903 million euros in revenue, the most in six quarters and more than analysts predicted, helped by equity derivatives and North American business.

Fixed income was “disappointing” and underperformed competitors such as New York-based Goldman Sachs, which reported record revenue of $6.8 billion, said Kian Abouhossein, a London- based analyst at JPMorgan, in a note to investors.

“In the long term, it’s the right strategy” to cut risks, said Abouhossein, who has a “neutral” rating on the German bank’s shares, in a telephone interview. “Deutsche Bank becomes a cleaner and better bank, at a price of not being able to take risks, which clearly impacts earnings.”

Lower Leverage

Ackermann, 61, reduced the firm’s leverage ratio, a measure of its reliance on borrowed money, to 24 times by the end of June from 38 times a year earlier. So-called level 3 assets, which are the hardest to value and trade, declined 20 percent to 64 billion euros in the second quarter.

“The fact is that Deutsche Bank is taking fewer opportunities in the market,” said Guy de Blonay, who helps manage about $70 billion, including Deutsche Bank shares, at Henderson Global Investors Ltd. in London.

To contact the reporter on this story: Aaron Kirchfeld in Frankfurt at akirchfeld@bloomberg.net; Elena Logutenkova in Zurich at elogutenkova@bloomberg.net

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Bernanke’s Assets Tumbled as Much as 29% as U.S. Stocks Fell

By Michael McKee and Scott Lanman

July 29 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke’s assets tumbled by as much as 29 percent last year as declining stocks eroded the value of his annuities and other investments, according to his annual financial disclosure forms.

The filings, released by the Fed yesterday, show Bernanke and his family owned $852,000 to $1.9 million in financial assets in 2008, down from $1.2 million to $2.5 million in 2007. The forms, published by the Office of Government Ethics, require officials to report only a range in the value of holdings.

The Fed chairman’s two largest assets in both years were TIAA Traditional, recorded as an annuity, and CREF Stock Large Cap Blend, a variable annuity. While both were valued at $500,001 to $1 million in 2007, the CREF stock fund fell to a range of $250,001 to $500,000 last year, according to the documents.

A retirement account invested in high-yield bonds at BlackRock Inc. held its value in a range of $15,001 to $50,000, and a BlackRock large-cap fund remained in the $1,001 to $15,000 range.

The funds were run by Merrill Lynch & Co. when Bernanke invested in them. Merrill merged them with BlackRock, and the funds were renamed, in 2007. As widely held mutual funds, they are exempt from regulations barring the Fed chairman, and other members of the Fed board, from owning stock in institutions involved in banking or finance.

The central bank hired BlackRock last year to manage billions of dollars in assets it acquired in the rescue of Bear Stearns Cos. and the bailout of American International Group Inc.

Canadian Bonds

The disclosure forms show Bernanke sold most or all of his holdings in Canadian Treasury bonds. They were valued in 2008 at between zero and $1,001. In 2007 he reported their worth at between $50,001 and $100,000.

Bernanke, 55, who succeeded Alan Greenspan as chairman in 2006, received a salary of $191,300 in 2008, an amount set by Congress.

A former economics professor at Princeton University in New Jersey, Bernanke received between $50,001 and $100,000 in royalties for a textbook he wrote, published by Pearson, Inc. The range was unchanged from his 2007 filing.

A second textbook, published by McGraw-Hill Cos., earned Bernanke between $100,001 and $1,000,000 in royalties, up from $50,001 to $100,000 in 2007. The royalties were his biggest sources of income after his salary.

Bernanke reported no liabilities, individual stocks, gifts or travel expenses in 2008.

To contact the reporters on this story: Michael McKee in New York at mmckee@bloomberg.net; Scott Lanman in Washington at slanman@bloomberg.net

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Arkema, Icade, M6, Peugeot, Sanofi: French Stocks Preview

By Helene Fouquet

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

France’s CAC 40 Index fell 41.39, or 1.2 percent, to 3,330.97 in Paris, the steepest decline in more than two weeks. The SBF 120 Index lost 1.2 percent.

Arkema SA (AKE FP): The chemicals company plans to spend 15 million euros building a specialty acrylic polymer plant at its Changshu site in China. The shares lost 72 cents, or 3.8 percent, to 18.08 euros.

Bureau Veritas SA (BVI FP): The world’s second-largest goods inspection company said second-quarter revenue rose 5.3 percent to 681.3 million euros and forecast full-year like-for- like revenue will grow less than 10 percent from year-earlier levels. The shares fell 27 cents, or 0.8 percent, to 33.50 euros.

Coheris SA (COH FP): The software maker reported first-half revenue of 15.12 million euros, little changed from year-earlier levels, and forecast that trend would continue for the full year. The shares rose 8 cents, or 3.3 percent, to 2.48 euros.

European Aeronautic, Defence and Space Co. (EAD FP): Seven current and former executives face potential civil fines in a French regulator’s probe of insider trading allegations, two people familiar with the case said. They include former Chief Executive Officer Noel Forgeard, who risks a 5.45 million-euro fine, according to his spokesman. The shares gained 29.5 percent, or 2.3 percent, to 13.01 euros.

Icade SA (ICAD FP): The real estate company said first-half net income rose 22 percent to 111.5 million euros, helped by gains from the sale of properties over the period. The shares added 1.12 euros, or 1.9 percent, to 60 euros.

Lafarge SA (LG FP): The world’s biggest cement producer sold its Chilean cement, aggregates and concrete assets to Peru’s Brescia Group for an enterprise value of $555 million.

M6-Metropole Television SA (MMT FP): France’s second- largest commercial television company reported a 1.1 percent rise in first-half net income to 80.1 million euros. The half- year earnings aren’t necessarily an indicator for the full year, the company said. The shares dropped 47 cents, or 3.5 percent, to 13 euros.

PSA Peugeot Citroen (UG FP): Europe’s second-biggest carmaker reports first-half earnings before the market opens in Paris. The shares advanced 18 cents, or 1 percent, to 18.41 euros.

Sanofi-Aventis SA (SAN FP): France’s biggest drugmaker reports first-half earnings before the market opens in Paris. The shares rose 89 cents, or 1.9 percent, to 46.98 euros.

To contact the reporter on this story: Helene Fouquet in Paris at Hfouquet1@bloomberg.net.

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Wells Fargo’s Expansion Kindles Passion for Investment Banking

By Ari Levy

July 29 (Bloomberg) -- Wells Fargo & Co.’s $12.7 billion purchase of Wachovia Corp., meant to bolster deposits and mortgage operations, has deepened the company’s commitment to investment banking as corporate stock and bond sales surge.

Wells Fargo ranked 13th in the second quarter among underwriters of U.S. bonds and 10th in global equity offerings, according to data compiled by Bloomberg. Last year, before the Wachovia acquisition, Wells Fargo failed to crack the top 30 in either category. Investment banking revenue jumped 29 percent in the second quarter from the first three months of 2009.

Chairman Richard Kovacevich said in 2005 that Wells Fargo’s consumer-oriented culture was “incompatible” with an investment bank, and Executive Vice President Bruce Helsel said in March 2008 that the businesses would be difficult to integrate. That was before Bear Stearns Cos., Lehman Brothers Holdings Inc. and Merrill Lynch & Co. collapsed or were sold, allowing San Francisco-based Wells Fargo to expand, said Executive Vice President Tim Sloan, in an interview last week.

“There are just fewer competitors out there,” said Sloan, 49, head of wholesale banking’s commercial, real estate and specialized financial services group in Los Angeles. “We’re out pitching business everyday.”

Earlier this month, the Wachovia Securities brand was changed to Wells Fargo Securities, a unit that includes the acquired investment banking and capital markets divisions as well as Barrington Associates, a Los Angeles-based investment bank that Wells Fargo bought three years ago. Former Wachovia executives Robert Engel and Jonathan Weiss were appointed in January to lead the groups.

Wholesale Banking

The 2,800-person unit is part of Wells Fargo’s wholesale banking group, which generated $5.2 billion in second-quarter revenue, more than double a year earlier before the Wachovia deal. Wholesale banking accounted for 23 percent of Wells Fargo’s total revenue in the period.

Sloan, who oversees 25 businesses and has worked at Wells Fargo for 22 years, said the company is making its first significant push into investment banking by offering more services to existing customers. Wells Fargo was able to win underwriting services to Oracle Corp. because it already provided treasury management and investment products to the Redwood City, California-based software company, he said.

Wells Fargo participated in two deals yesterday, the biggest acquisitions it’s been involved with this year. The company advised Sprint Nextel Corp. on its agreement to buy out Virgin Mobile USA Inc. for $420 million and worked on Targa Resources Partners LP’s agreement to buy its founder’s natural- gas-liquids business for $530 million.

Debt and Equity

Among Wells Fargo’s largest deals in the second quarter were Oracle’s $4.5 billion debt sale and co-managing casino owner MGM Mirage’s $2.5 billion stock and bond sales. Debt sales in the U.S. jumped 17 percent in the first half from the first six months of 2008 to $1.18 trillion, and the $165.7 billion in second-quarter global equity offerings marked the busiest period since the fourth quarter of 2007, Bloomberg data show.

The bank is also reviving equity research, a division that Sloan eliminated in 2005 because “we didn’t have a large enough investment banking or sales and trading presence to justify it,” he said. In buying Wachovia, Wells Fargo inherited A.G. Edwards Inc., a St. Louis-based securities company with a research division that Wachovia bought for $6.5 billion in 2007.

Wells Fargo now has 65 research analysts covering equity, fixed-income and structured products, spokeswoman Elise Wilkinson said in an e-mail. Research will focus on areas where the company has the biggest lending presence, Sloan said.

Prudential Stake

The bank’s financial commitment to the securities business will deepen when it buys back a stake in the unit from Prudential Financial Inc., which last month exercised an option to sell its minority stake in Wells Fargo Advisors. Prudential helped create Wachovia Securities in 2003. The sale is expected to close by Jan. 1.

Wells Fargo agreed to buy Wachovia in October, outbidding Citigroup Inc., after surging mortgage defaults left the Charlotte, North Carolina-based lender on the verge of collapse. Wells Fargo Chief Financial Officer Howard Atkins said in a conference call the following month that the company was looking to downsize the “higher risk, more transactional elements” of Wachovia’s operations, including investment banking.

That approach initially created some “concern and trepidation” among employees about the company’s direction, Sloan said. While the bank eliminated the proprietary trading component of the securities division because it was considered too risky, the overall business is growing, he said.

Waning Competition

“It’s outside of their core competency,” said Chris Armbruster, an analyst at Al Frank Asset Management Inc. in Laguna Beach, California, which oversees $390 million including Wells Fargo shares. “The Wachovia guys are a little better suited to bring their past expertise to the business, but there’s still a little bit of risk.”

Lehman Brothers, which went bankrupt in September, was the fifth-biggest underwriter of U.S. debt sales and ranked ninth in global equity offerings in 2007. Merrill Lynch was in the top 10 in both categories before agreeing to be bought by Bank of America Corp. Bear Stearns was in the top 20 in both areas in 2007, prior to being rescued by JPMorgan Chase & Co. the following March.

“There is market share to be had because you have lost some players and you still have some weak players,” said Charles Peabody, an investment banking analyst at Portales Partners LLC in New York, in an interview. “There is an underwriting cycle that has emerged once again in both fixed income and equity.”

Goldman Sachs

While Wells Fargo can gain business from current customers, it can’t compete with Goldman Sachs Group Inc., Morgan Stanley and JPMorgan in advising on the biggest deals, said Joe Morford, an analyst at RBC Capital Markets in San Francisco. The three New York-based firms participated in at least 28 percent of announced mergers and acquisitions globally this year by dollar amount, according to Bloomberg data. Wells Fargo has been involved with 0.2 percent.

“I don’t think they have the aspirations to compete against the big boys,” said Morford, who owns Wells Fargo shares and has a “buy” rating on them.

To contact the reporter on this story: Ari Levy in San Francisco at alevy5@bloomberg.net

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Countrywide Alumni Seek Profits From Mortgage Market’s Collapse

By Elizabeth Stanton

July 29 (Bloomberg) -- PennyMac Mortgage Investment Trust, which plans to raise $400 million in a stock offering today, is betting that the people who helped create the housing crisis will know how to profit from the cleanup.

Chief Executive Officer Stanford L. Kurland, 57, was president and chief operating officer of Countrywide Financial Corp., the loan originator whose co-founder, Angelo Mozilo, was sued by the Securities and Exchange Commission. Ten other senior officials also worked at Countrywide, whose subprime loans have suffered from a 39 percent delinquency rate, according to data compiled by Bloomberg. PennyMac hopes to make money buying mortgages from failed banks and redoing the terms.

“People who are critical of Wall Street will find with justification things to criticize here,” said Stanley Nabi, who oversees $7.5 billion as vice chairman of Silvercrest Asset Management Group in New York. “They’re going to say, ‘Look, these are the people who created this crisis, and now they’re buying this paper on the cheap.’”

PennyMac operates in a growing market. More than 1.5 million properties received a default notice or were seized in the U.S. during the first six months of 2009, a record, according to RealtyTrac Inc., which sells mortgage data. Backed by BlackRock Inc. and Highfields Capital Management LP, PennyMac plans to charge fees similar to those at hedge funds as it tries to rehabilitate loans.

SEC Lawsuit

Rising default rates at Countrywide drove its shares down 91 percent through March 2008, prompting a sale to Bank of America Corp., based in Charlotte, North Carolina. Mozilo, who co-founded Countrywide in 1969, was sued in June by the SEC for allegedly hiding the company’s deteriorating finances.

Kurland quit Countrywide in September 2006, ending a 27- year career with the largest U.S. mortgage lender. Once considered Mozilo’s likely successor, Kurland was replaced by David Sambol, one of two top Countrywide executives who the SEC sued along with Mozilo. No one at PennyMac was the target of the lawsuit.

Ray Johnson, a spokeswoman at PennyMac, declined to comment, citing regulatory restrictions prior to initial public offerings. The company cut the size of the deal, scheduled for completion after the close of trading today, from $750 million on July 16 when it announced plans to sell shares for $20 each. They will trade under the “PMT” stock symbol.

The real-estate investment trust says it will buy loans from lenders who failed as well as mortgage companies and insurers. In January, it purchased $558 million of mortgages that the Federal Deposit Insurance Corp. acquired last year after First National Bank of Nevada failed.

64 Bank Closures

The collapse of the U.S. mortgage market has caused more than $1.5 trillion in losses at financial institutions worldwide and prompted the FDIC to close 64 U.S. banks this year, the most since 1992.

PennyMac’s investments may return 15 percent to 25 percent a year, said Evan Gentry, the founder and chief executive officer of G8 Capital, a private buyer of distressed loans and real estate based in Ladera Ranch, California. Two of Gentry’s funds use a similar strategy.

“New mortgage REITs look more desirable than at any time I can remember,” said Dean Frankel, a money manager at Urdang Securities Management who met with PennyMac officials on July 22 to discuss the offering. Urdang, a unit of Bank of New York Mellon Corp. in Plymouth Meeting, Pennsylvania, manages $1.5 billion of real-estate investments. “While we don’t generally invest in mortgage REITs, we are taking a hard look,” he said.

Incentive Fees

PennyMac executives plan to charge a management fee equal to 1.5 percent of shareholders’ equity plus an incentive fee that’s one-fifth of profits above a certain level. It would be the first REIT since 2007 to succeed in charging an incentive fee, which are standard among hedge funds. While American Bethesda, Maryland-based Capital Agency Corp. and Cypress Sharpridge Investments Inc. of New York tried to, they scrapped those provisions prior to their IPOs in May 2008 and June 2009, respectively.

At least six other mortgage-related IPOs are pending, five of which also aim to collect incentive fees. New York-based Sutherland Asset Management Corp. amended its prospectus yesterday to remove one.

Investors may agree with PennyMac that its connection with Countrywide is an asset, said Matthew Howlett, who analyzes real-estate securities at Fox-Pitt Kelton Inc. in New York. PennyMac’s offices in Calabasas, California, are less than five miles from Countrywide’s.

‘Enormously Profitable’

“They understand the reasons a lot of these borrowers ended up defaulting,” he said. “They’re uniquely positioned to identify and correct them, and that can be enormously profitable in this environment given the prices.”

PennyMac’s strategy may rely too heavily on the assumption that investor appetite for mortgage-related assets will recover, said Terry Wakefield. He is a consultant to the residential loan industry who helped design Fannie Mae’s mortgage-backed securities business in 1981 and later traded the derivatives at Salomon Brothers Inc.

High default rates on restructured loans may also deter investors, Wakefield said. About 53 percent of mortgages modified in the first quarter of 2008 were 30 or more days delinquent after six months, and 63 percent were in default after a year, according to a June 30 report by the Office of the Comptroller of the Currency and the Office of Thrift Supervision.

“The big issue in PennyMac’s world is: Where are they going to sell those loans, assuming they’ve been effectively modified?” Wakefield said. “I don’t know a lot of people standing in line to buy those assets.”

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

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Bayer, Infineon, Krones, SAP AG, Vossloh: German Equity Preview

By Nadja Brandt and Julie Cruz

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

DAX Index futures expiring in September added 0.6 percent to 5,210.00 as of 8:12 a.m. in Frankfurt. The DAX dropped 1.5 percent to 5,174.74.

Bayer AG (BAY GY): Germany’s largest drugmaker said second- quarter net income fell 7.3 percent to 532 million euros ($753 million) from 574 million euros a year earlier as sales declined. The shares fell 0.4 percent to 40.05 euros.

Continental AG (CON GY): Karl-Thomas Neumann, chief executive officer of the German car parts and tire manufacturer, has asked members of the supervisory board to back a capital increase, the Handelsblatt newspaper reported, citing a letter. The shares added 0.4 percent to 25.73 euros.

Deutsche Boerse AG (DB1 GY): The operator of the Frankfurt bourse was downgraded to “hold” from “buy” at Deutsche Bank AG, which cited “weakening trading data.” The shares lost 3.1 percent to 57.55 euros.

Infineon Technologies AG (IFX GY): Europe’s second-largest chipmaker said its net loss narrowed to 23 million euros in the third quarter from 258 million euros in the second quarter. The shares dropped 3.5 percent to 2.66 euros.

Krones AG (KRN GY): The maker of bottling and packaging equipment reported a first-half pretax loss of 15.8 million euros as sales declined. The shares fell 2.1 percent to 26.41 euros.

MorphoSys AG (MOR GY): The biotechnology company said first-half net income declined to 5 million euros from 6.3 million euros. Revenue gained. The shares climbed 0.2 percent to 16.95 euros.

SAP AG (SAP GY): The world’s biggest maker of business- management software raised its margin forecast for this year, helped by job cuts, and slashed its target for software and related service revenue.

The target for full-year non-GAAP operating margin was raised to between 25.5 percent and 27 percent. It earlier forecast a margin of 24.5 percent to 25.5 percent. SAP now forecasts non-GAAP software and software-related service revenue will fall 4 percent to 6 percent, versus a previous goal of it being “flat” to 1 percent lower.

The shares dropped 1.1 percent to 31.20 euros.

TUI AG (TUI1 GY): Europe’s largest tour Operator and some of its fellow owners of the cash-strapped Hapag-Lloyd shipping line agreed to buy the unit’s stake in a container terminal to ensure the vessel owner’s solvency. TUI shares fell 1.5 percent to 4.41 euros.

Vossloh AG (VOS GY): Germany’s biggest supplier of concrete railroad ties said second-quarter net income declined 8.6 percent to 24.6 million euros. Vossloh confirmed its full-year profit forecast and lowered its sales outlook for 2009. The shares fell 0.1 percent to 83.51 euros.

To contact the reporters on this story: Nadja Brandt in Los Angeles at nbrandt@bloomberg.net; Julie Cruz in Frankfurt at jcruz6@bloomberg.net.



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India Keeps Rate Steady And New Zealand Still Suffers From Lower Exports

Daily Forex Fundamentals | Written by ecPulse.com | Jul 28 09 07:17 GMT |

New Zealand surprised markets today when its trade balance indicated an unexpected deficit during June, after demand on imports increased while exports shrank more than expected, indicating that the worst recession since in more than 30 years is still weakening the economy by hurting companies and households. The trade balance recorded in June a deficit by 417.0 million New Zealand dollars from the previous revised reading of 907.0 million of surplus and the expected 215.0 million surplus; on an annual basis the deficit reached to 3176 million in June from the previous -2973.0 million and the expected -2614 million. Imports rose to 3.62 billion New Zealand dollars in June from the previous 3.10 billion and more than the expected 3.20 billion, since Jetstar Airways Pty made some aircraft orders intending to start a new service; meanwhile, imports rose to 3.20 billion dollars in June, however less than the previous 3.96 billion and the expected 3.40 billion. The rise in imports is not based on the improvement in domestic consumption, which remains weak, therefore hopes were hanged on an increase in demand on exports since China is showing real recovery signs, while many other major economies are showing signs of stability, but this did not happen. As demand on various commodities remain low since the industrial production did not grow enough, therefore companies revenues remain low and this what determines it, then to curb investment and refrain from hiring, since this is only hurting the jobs sector and might keep the unemployment rate elevated. Moving to India, where its central bank kept their interest rate unchanged at 3.25%, just like some other countries like England and Japan; indicating that sharpest round of cuts might be ending, not only because signs of recovery have emerged but also because of fears the fears from inflation. As the Indian central bank raised their inflation expectations for this year which started on 31st of March to 5% from their previous estimations of 4%, due to not only to the rise in food and commodities prices but also because of the government spending plans, which might increase confidence, domestic spending and boost growth. The Indian central bank expects the economy to grow this year by 6.5% from the previous estimations of 5.7%, therefore the central bank should be careful regarding its next monetary policy step, since it might be hurting to the economy to continue cutting rates, while moving to a tighter monetary policy is still too soon since demand on exports and real growth is not seen yet. Ecpulse disclaimer: The content of ecPulse.com and any page in the website contain information for investors/traders and is not a recommendation to buy or sell currencies, stocks, gold, silver & energies, nor an offer to buy or sell currencies, stocks, gold, silver & energies. The information provided reflects the writers' opinions that deemed reliable but is not guaranteed as to accuracy or completeness. ecPulse is not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trades currencies, stocks, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, stocks gold, silver &energies presented should be considered speculative with a high degree of volatility and risk

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Technical Analysis for Major Currencies

Daily Forex Technicals | Written by ecPulse.com | Jul 28 09 06:50 GMT |

EURO The EUR/USD pair was able to achieve some bearish movements yesterday but it did not surpass 1.4200, which clearly shows the momentum needed to achieve the previously expected incline. We notice a top forming that may complete a bullish technical pattern with a pivot level at 1.4305, where we expect the pair to achieve an incline on an intraday basis and breach this level to head towards 1.4460; most important targets today, ahead of continuing the upside short term direction, targeting levels near 1.4800. 1.4155 is vital for the expected upside direction to prevail. The trading range for today is among the key support at 1.3850 and the key resistance at 1.4440. The general trend is to the downside as far as 1.4710 remains intact with targets at 1.2120. Support: 1.4215, 1.4155, 1.4075, 1.4035, 1.4005 Resistance: 1.4305, 1.4365, 1.4420, 1.4460, 1.4490 Recommendation: Based on the charts and explanations above our opinion is buying pair from 1.4310 To 1.4460 and stop loss below 1.4215, might be appropriate. GBP The cable continued its attempts to remain above 1.6500; something that gives the pair a good push supporting the expected upside intraday direction. The stochastic continues to pressure the pair to the downside, thus we find instability for the pair's durrent trend. Hence, the pair may fluctuate, again, around 1.6500 to gain enough momentum to support the expected incline for today, where key targets are around 1.6680. 1.6320 remaining intact is vital to keep the pair's upside direction. The trading range for today is among the key support at 1.6155 and the key resistance at 1.6740. The general trend is to the upside as far as 1.4840 remains intact with targets at 1.7100. Support: 1.6490, 1.6455, 1.6380, 1.6300, 1.6210 Resistance: 1.6545, 1.6605, 1.6680, 1.6740, 1.6770 Recommendation: Based on the charts and explanations above our opinion is buying pair from 1.6545 To 1.6680 and stop loss below 1.6455, might be appropriate. JPY The USD/JPY pair succeeded in building a support to base itself on and help in achieving upside targets on the short term direction, where its targets are at 96.75 through remaining above the 61.8% correction at 94.90. From here; we hold our previous predictions as long as the intraday incline continues, and completes the upside short term direction towards the mentioned targets protected by the 100 MA and 200 MA. 93.70 remaining intact is vital for achieving these upside movements. The trading range for today is among the key support at 91.80 and the key resistance at 98.80. The general trend is to the upside as far as 102.60 remains intact with targets at 84.95 and 82.60. Support: 94.90, 94.05, 93.70, 93.40, 92.75 Resistance: 95.65, 96.00, 96.80, 97.55, 98.05 Recommendation: Based on the charts and explanations above our opinion is buying pair from 94.90 To 96.00 and stop loss below 94.05, might be appropriate. CHF The USD/CHF pair continues trading around the key support awaited to be breached at 1.0685, through trading within the minor bearish channel, where its tendency is towards the downside. This trading within the mentioned channel keeps our expectations for the pair's downside movements to remain valid; while we expect for today a bearish intraday trend breaching the key support at 1.0685 to head towards 1.0570, where continuing the bearish pressure and breaching this level will lead to the general direction reversing to the downside. Momentum indicators are currently neutral with the stochastic oscillator showing a negative crossover that supports our predictions for today. 1.0860 remaining intact is vital for chances of bearish movement to prevail. The trading range for today is among the key support at 1.0365 and the key resistance at 1.0980. The general trend is to the upside as far as 1.0570 remains intact with targets at 1.2245. Support: 1.0685, 1.0655, 1.0570, 1.0505, 1.0470 Resistance: 1.0740, 1.0780, 1.0845, 1.0860, 1.0935 Recommendation: Based on the charts and explanations above our opinion is selling pair from 1.0675 To 1.0570 and stop loss above 1.0740, might be appropriate CAD The USD/CAD pair settled around the key support at 1.0785, which indicates a continuing pressure on it in an attempt to breach to the downside, where we still see that the bearish movement is still valid and targeting 1.0660. Momentum indicators are showing oversold signals, whereas the pair is not reacting to these signs where it could wait until it reaches the key target to head further to the downside to 1.0300, so that these indicators would take effect. Chances of a downside movement will prevail if 1.0935 remain intact. The trading range for today is among the key support at 1.425 and the key resistance at 1.1010. The general trend is to the downside as far as 1.1870 remains intact with targets at 1.0300. Support: 1.0785, 1.0725, 1.0700, 1.0660, 1.0615 Resistance: 1.0845, 1.0935, 1.1010, 1.1080, 1.1115 Recommendation: Based on the charts and explanations above our opinion is selling pair from 1.0775 To 1.0660 and stop loss above 1.0845, might be appropriate Ecpulse disclaimer: The content of ecPulse.com and any page in the website contain information for investors/traders and is not a recommendation to buy or sell currencies, stocks, gold, silver & energies, nor an offer to buy or sell currencies, stocks, gold, silver & energies. The information provided reflects the writers' opinions that deemed reliable but is not guaranteed as to accuracy or completeness. ecPulse is not liable for any losses or damages, monetary or otherwise that result. I recommend that anyone trades currencies, stocks, gold, silver & energies should do so with caution and consult with a broker before doing so. Prior performance may not be indicative of future performance. Currencies, stocks gold, silver &energies presented should be considered speculative with a high degree of volatility and risk

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FX Technical Analysis

Daily Forex Technicals | Written by Mizuho Corporate Bank | Jul 28 09 06:38 GMT |

EURUSD Comment: Holding well above a large Ichimoku 'cloud' with moving averages decidedly bullish. If the lagging Span manages to hold above the top of the 'triangle' bullish momentum should increase even further for a test of this year's high at 1.4339. Implied volatility should pick up next where traders and investors should note that current consensus opinion is that the US dollar should strengthen over the coming 12 months. Strategy: Buy at 1.4275, adding to 1.4200; stop below 1.4100. Short term target 1.4300/1.4339, a lot more on a sustained break above 1.4375. Direction of Trade: → ↗ Chart Levels: Support Resistance 1.4240 " 1.43 1.42 1.4339* 1.4165 1.4365* 1.4118* 1.443 1.4095 1.453 GBPUSD Comment: Cable is inching fractionally higher and bullish momentum should increase if the Lagging Span manages to hold above the upper edge of the 'triangle' formation. The pound is not overbought and several other currencies look similar. Strategy: Attempt small longs at 1.6550, adding to 1.6450; stop well below 1.6300. First target 1.6600/1.6650 and then this year's high at 1.6745. More later this year. Direction of Trade: →↗ Chart Levels: Support Resistance 1.6490 " 1.656 1.6457 1.6587 1.6382 1.6625 1.63 1.6664 1.6187 1.6745 USDJPY Comment: Stalling against Fibonacci retracement but few clear signs of topping yet. Some stops were triggered on yesterday's blip above last week's high at 95.30. Open interest in the futures market continues to decline and is running at the lowest since 2003. Strategy: Attempt small shorts at 95.15; stop well above 95.40. Add to shorts on a sustained break below 94.40 for 93.25 Direction of Trade: → Chart Levels: Support Resistance 94.59/94.40 " 95.39* 94 95.5 93.85 95.67 93.5 96 93.00* 96.25* EURJPY Comment: Trading at some of the highest levels this year and we shall continue to watch for signs of topping today and all week. Strategy: Possibly attempt tiny shorts at 135.80; stop above 136.25. Add to shorts on a sustained break below 134.00 for 132.00. Direction of Trade: →↘ Chart Levels: Support Resistance 135.00 " 135.88 134.65 136.11 134.25 136.75 133.85 136.9 132.85 137.42 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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