Gold Advances on Inflation Concern; Heads for Weekly Increase

By Nicholas Larkin

May 8 (Bloomberg) -- Gold rose in London, heading for a weekly gain, on speculation central-bank measures to revive economies will spur inflation and demand for bullion as a hedge.

The European Central Bank yesterday cut benchmark interest rates to a record 1 percent and unveiled plans to buy 60 billion euros ($81 billion) in covered bonds, while the Bank of England said it would increase purchases of debt.

“Credit markets will be unblocked at some point, and this will push up inflation,” Walter de Wet, a London-based analyst at Standard Bank Ltd., said by phone today. ECB and BOE action is “bullish for gold” and “pushes more liquidity into the financial system.”

Bullion for immediate delivery rose $5.62, or 0.6 percent, to $916.32 an ounce by 11:53 a.m. in London, set for a 3.4 percent gain this week. June futures added 0.2 percent to $917.10 in electronic trading on the New York Mercantile Exchange’s Comex division.

The metal increased to $917.50 in the morning “fixing” in London, used by some mining companies to sell production, from $912.25 at yesterday’s afternoon fixing. Still, gains in the metal are being curbed on anticipation the worst of the crisis in the world banking system may have past.

The Federal Reserve determined 10 banks need to raise a total of $74.6 billion in capital, a finding that Chairman Ben S. Bernanke said should reassure investors about the soundness of the financial system. A government report later today will probably show U.S. employers cut fewer jobs in April as signs emerged that the worst of the U.S. recession had passed, according to a Bloomberg survey of economists.

Employment Report

“The much-dreaded U.S. bank stress tests turned out to be a ‘no mover,’ and if today’s non-farm payrolls too come in line with market expectations, gold could suffer a setback,” Pradeep Unni, an analyst at Richcomm Global Services DMCC in Dubai, wrote in a research report today.

Payrolls dropped by 600,000 last month, less than March’s 663,000, the survey shows.

Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, was unchanged at 1,104.09 metric tons yesterday. The fund last attracted new flows on April 9.

The precious metal may extend gains next week, according to 22 of 32 traders, investors and analysts surveyed by Bloomberg News. Seven people forecast lower prices and three were neutral. Prices yesterday rose above the 50-day and 100-day moving averages, indicators that gold has further to climb.

Silver, Platinum

Among other metals for immediate delivery in London, silver rose 0.7 percent to $13.945 an ounce. Platinum gained 0.3 percent to $1,151.50 an ounce, and palladium advanced 0.8 percent to $241 an ounce.

Sales of autos, which use platinum and palladium to reduce exhaust fumes, in China rose to a record in April, the China Association of Automobile Manufacturers said today. The country has withstood a global slump in auto sales as the government has cut retail taxes and begun handing out 5 billion yuan ($733 million) in subsidies to help boost demand.

“The numbers were better than expected,” Afshin Nabavi, a senior vice president at Swiss bullion refiner MKS Finance SA, said by phone in Geneva today. “That’s impressing the platinum and palladium market.”

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

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Allstate, AIG, CBS, Fuel Systems, Genworth: U.S. Equity Preview

By Lu Wang

May 8 (Bloomberg) -- Shares of the following companies may have unusual moves in U.S. trading. Stock symbols are in parentheses.

Allstate Corp. (ALL US): The largest publicly traded U.S. home and auto insurer posted its third straight quarterly loss on investment writedowns and declines in private equity and hedge fund holdings. Profit before investment losses was 84 cents a share, compared with the $1.25 estimate of 14 analyst surveyed by Bloomberg.

American International Group Inc. (AIG US): The insurer reported its sixth straight loss tied to investment markdowns. The loss excluding some investment results was 97 cents a share, wider than the 13-cent average loss estimate from analysts surveyed by Bloomberg.

CBS Corp. (CBS US): The owner of the most-watched television network reported an unexpected first-quarter loss as advertisers cut spending during the U.S. recession.

Fuel Systems Solutions Inc. (FSYS US): The company whose devices allow internal-combustion engines to run on alternative fuels reported profit excluding some items of 44 cents a share in the first quarter, more than double the average analyst estimate, according to Bloomberg data.

Genworth Financial Inc. (GNW US): The life insurer and mortgage guarantor that failed to qualify for U.S. aid reported a fourth straight quarterly loss as the value of holdings backing insurance policies plummeted.

Morgan Stanley (MS US): The sixth-biggest U.S. bank by assets said it plans to raise $2 billion in a share sale and $3 billion by selling debt that’s not guaranteed by the government.

Wells Fargo & Co. (WFC US): The biggest U.S. mortgage originator must raise $13.7 billion after the government’s stress test found the bank had too little common equity to withstand a prolonged recession. The company said earlier it plans to sell $6 billion of common stock.

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

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Asian Market Update

Daily Forex Fundamentals | Written by Trade The News | May 08 09 06:50 GMT |

US Banking Stress Tests Quantify Capital Needs but Hardly Pack Sufficient Punch to Live up to Name; Toyota Shares Fall on Profit Speculation by Press; RBA, Treasury Downgrade Australia's GDP Forecasts; USD Majors Drift Pre-NFP Asian equity markets have shrugged the weakness in US indices on Thursday after the widely dreaded stress-tests for US financials proved to be far more innocuous than initially feared. Nikkei225 finished a stellar week with a gaining session of 0.5%, S&P/ASX traded up 0.1%, and Kospi rallied 0.8%. Front-month S&P futures spent much of the latter part of Asian trading at session highs, up 0.8%. Much of the findings proved to be confirmation of the known developments as 10 of the 19 banks were said to require additional capital in aggregate of $74.6B. Bank of America required the biggest chunk of that sum at $33.9B, pledging to initiate a common equity raise of about $17B made up of ATM offering commencing on Friday with $1.5B and also conversion of non-govt preferred into common equity. Most notably, BAC conference call revealed a healthy Tier 1 capital ratio, with equity request stemming from shoring up the low common value. Additionally, BAC suggested the Fed scenario assumed greater deterioration of economic conditions than previously experienced and was out of line with trends of recovery. Other banks told by the Treasury to raise capital included Citigroup, Fifth Third Bancorp, GMAC, KeyCorp, Morgan Stanley, PNC, Regions Financial, SunTrust and Wells Fargo. Citigroup was instructed to raise $5.5B, below the $10B speculated. The company planned to expand public exchange offers by $5.5B to $33B and much like BAC, rejected the notion of requiring additional bailout funds. Shares of both traded much firmer on the heels of the stress test findings, as the banks will have until June 8 to come up with a plan to raise the needed equity. Asian economic calendar was limited to central bank quarterly monetary policy statement from Australia. RBA cut its Q2 GDP estimate to contraction from +0.25% to -1.25% while targeting 2009 GDP at -1% and 2010 GDP at +2%. Annual core inflation was raised slightly to 3.25%, but subsequent year's pricing pressure was downgraded through 2011 on forecast of a more gradual and protracted price slowdown. Furthermore, RBA forecasted return in rising unemployment, but did anticipate a more gradual approach to monetary easing amid signs of stabilization in global slowdown with existing monetary and fiscal stimulus supporting domestic demand going forward. Australia's Treasurer Swan echoed RBA's sentiment, noting the upcoming budget plans would see a lower economic growth forecast. In notable Nikkei names, Toyota traded over 2% lower going into midday break after Japanese Press speculated the company may miss its FY09 operating target, forecastig a ¥500B loss vs a loss of ¥464B expected. Subsequently, Toyota's actual Operating loss actually fell beyond those estimates by ¥682.5B, as auto sector malaise bemoaned in controversial US industry bailout was evident in the global production leader. In tech, Konica Minolta cheered an upgrade to buy from Nomura with a 7% rally, while Sharp contracted 2% after S&P revised the outlook on the firm to negative. In financials, the sector leading this week's Nikkei advance to 6-month highs and once again outperforing other sectors, Mitsubishi Corp was one of the laggards after missing FY09 Net profit estimate of ¥401.2B with a ¥15.2B result while also missing the top line forecast of ¥23.09Te with ¥22.4T figure. Asian industrials saw earnings updates from Japan's Fuji Heavy and Korea's Doosan. Fuji Heavy beat on the top line, but missed slightly on net profit and cut is operating profit view for current year well below estimates, falling 6.5%. Korea's Doosan traded off by as much as 3% after missing Q1 net profit estimates of KRW28.6Be with a KRW179B loss. In Sydney, telecom Telstra reaffirmed FY09 guidance of 3.4% sales growth and traded slightly higher after announcing resignation of its CEO. Miners Rio Tinto and BHP fell 1-2% on consolidation in metal prices coupled with risk caution seen over the US session. In currencies, USD moved lower late in the session as Asian equities cautiously moved to their best levels on the day. EUR/USD recovered 1.34 handle while GBP/USD moved above 1.50 after falling broadly in the aftermath of expanded BOE quantitative easing. In commodity FX, AUD consolidated gains after backtracking from 0.76 intraday high, and CAD advanced below 1.17 against USD as front-month crude contract moved back above $57. Japanese Yen traded in narrow range against the greenback, but was sold more firmly against EUR as EUR/JPY moved to session high above 133 in late trading. Trade The News Staff Trade The News, Inc. Legal disclaimer and risk disclosure All information provided by Trade The News (a product of Trade The News, Inc. "referred to as TTN hereafter") is for informational purposes only. Information provided is not meant as investment advice nor is it a recommendation to Buy or Sell securities. Although information is taken from sources deemed reliable, no guarantees or assurances can be made to the accuracy of any information provided. 1. Information can be inaccurate and/or incomplete 2. Information can be mistakenly re-released or be delayed, 3. Information may be incorrect, misread, misinterpreted or misunderstood 4. Human error is a business risk you are willing to assume 5. Technology can crash or be interrupted without notice 6. Trading decisions are the responsibility of traders, not those providing additional information. Trade The News is not liable (financial and/or non-financial) for any losses that may arise from any information provided by TTN. Trading securities involves a high degree of risk, and financial losses can and do occur on a regular basis and are part of the risk of trading and investing.

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Forex Market Update: The 'Stress' Of The Stress Tests Is Over, Now We Await Non-Farm Payrolls

Daily Forex Fundamentals | Written by Saxo Bank | May 08 09 06:28 GMT |

No real market reaction after the stress results, if anything a tad positive HEADLINES US Q1 Non-farm Productivity out at +0.8% vs. +0.6% expected and revised -0.6% prior US Q1 Unit Labour Costs out at +3.3% vs. 2.7% expected and 5.7% prior US Weekly Initial Jobless Claims out at 601k vs. 635k expected and 635k prior US Apr. ICSC Chain Store Sales out at +0.7% y/y vs. -1.0% expected and -2.1% prior US Mar. Consumer Credit out at -$11.1b vs. -$4.0b expected and revised -$8.1b prior THEMES TO WATCH - UPCOMING SESSION GE Trade Data (not specified) UK PPI Input/Output (0830) GE Industrial Production (1000) CA Unemployment Rate (1100) CA Housing Starts (1215) US Non-farm payrolls (1230) US Unemployment Rate (1230) US Avg. Hourly Earnings (1230) US Wholesale Inventories (1400) Market Comments The fireworks in FX-land were mostly restricted to the early part of yesterday's session with the BOE and ECB providing the ammunition yet differing results. GBP weakened after the BOE announced additional quantitative easing measures yet the EUR responded positively after the ECB announced a widely-expected 25bp rate cut and a move to extend liquidity operations with banks to 12 months from the current 6 months. The US bank stress tests proved to be a damp squib. The numbers were broadly in line with previously leaked/discussed information, with 10 of the US' top 19 banks needing additional capital, cumulatively a $74.6 bln hole in balance sheets. Two of the banks – Wells Fargo and Morgan Stanley have already announced plans to raise capital while BoA reiterating that no further government money would be needed. There was very little fallout in markets. After Wall St had closed 1.3% lower, US stock futures were marginally in the black during Asian hours. Asian bourses were mainly steady after the strong run-up this week and saw only marginal profit-taking pressuring. There were some more positives to be gleaned from the ICSC Chain Stores data which showed a strong rebound in April, rising 0.7% y/y after March's 1% contraction. But before we get too carried away, it is worth noting that March data on consumer credit showed a record decline in outstanding balances, falling $11.1 bln in the month. Revolving credit fell by $5.4 bln after a $9.7 bln fall in February. In the aftermath of the ECB's announcement that it was to start buying EUR60 bln in covered bonds, ECB's Mersch commented in European press that the central bank would be able to exit from its program quickly if the inflation environment turned unfavourable. Earlier, ECB's Weber had assured that the central bank would exit non-standard measures when bank lending and the economy show signs of improvement. Markets are still treating the ECB developments with indifference, partly because of the relative size of the program (about 0.7% of European GDP compared with 2% in Japan and 5% in UK). With the recent data releases around the globe mostly beating forecasts and prompting a constant barrage of comments on “green shoots' and “breaks in the cloud', one could have been forgiven for expecting the RBA to give a more positive slant to its quarterly Monetary Policy Statement issued today. However this was not to be, with the RBA slashing its near-term growth forecasts and acknowledging that Australia had slipped into a technical recession. It forecast a 1.25% contraction in the year to June and 1% for the full year 2009 with a gradual recovery from late 2009. Core CPI was revised higher to 3.75% in June (from 3.5%) and 3.25% for 2009 (from 3.0%), probably the first time in a while that anyone has referred to rising inflation! The AUD slid after the release of the statement, but was contained while bond yields edged marginally lower. Today's major event will be the release of US non-farm payroll and unemployment numbers. Market consensus is for a loss of 600k jobs in April, but note these surveys were taken before the surprise drop in the ADP private hiring report on Wednesday and the better-than-expected initial jobless claims yesterday. The unemployment rate is expected to tick up to 8.9% from 8.5% last month. Analysis Disclosure & Disclaimer SaxBank A/S shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by SaxBank that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades in accordance with the recommendations in an analysis, especially leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses as well as profits, in particular if the conditions mentioned in the analysis dnot occur as anticipated. SaxBank utilizes financial information providers and information from such providers may form the basis for an analysis. SaxBank accepts nresponsibility for the accuracy or completeness of any information herein contained. Any recommendations and other comments in SaxBanks analysis derive from objective fundamental macreconomical and company specific calculations, statistical and technical analysis, and subjective general market assessment. If an analysis contains recommendations tbuy or sell a specific financial instrument, such recommendation should be seen as SaxBanks opinion that the specific instrument will respectively outperform the relevant market or underperform compared tthe market. SaxBanks recommendations should statistically correspond tan even distribution between buy and sell recommendations. The recommendations may expire promptly due tmarket volatility and in general, SaxBank does not anticipate its recommendations tbe valid more than one month. An analysis will be updated if and only if a market development or other issues relevant tthe analysis render a new analysis on the same topic relevant. SaxBanks analysis does not cover any specific financial product over time but only products which SaxBanks strategy team finds it important tcover at any given point in time. In order tprevent conflicts of interest, SaxBank has established appropriate business procedures, incl. procedures applicable tresearch and analysis tensure objective research reports. SaxBanks research reports have not been discussed with the parties, e.g. issuers of securities, mentioned in the analysis. SaxBank is under supervision by the Danish Financial Supervisory Authority. SaxBank does not engage in corporate finance activities and accordingly, SaxBanks employees, incl. the persons responsible for an analysis, dnot receive remuneration associated with investment banking transactions.

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Wakeup Call: While We Are Waiting For US Unemployment Figures

Daily Forex Fundamentals | Written by Saxo Bank | May 08 09 06:48 GMT |

The stress test release from yesterday did not reveal anything that the market did not know. Today's unemployment figures will be decisive for equity market sentiment weeks ahead Calendar Economic Data Releases Country Name Time (GMT) Expectation Prior Comment GE 10:00 Industrial Production MoM (MAR) -1.3% -2.9% US 12:30 Change in Non-farm Payrolls (APR) -600K -663K US 12:30 Unemployment Rate (APR) 8.9% 8.5% What's going on? The stress test on US banks was released yesterday and nothing much new information was revealed. BofA need $34 bln., Wells Fargo $13.7 bln and CitiGroup $5.5 bln. The major issue is still whether the assumptions underlying the stress test regarding the worst case scenario is realistic. ECB cut interest rates to 1% and announced that it wants to buy debt and bunds were heading lower on this. BoE announced that it will have another go of buying debt despite that the prior attempt did not have any long lasting effect on the curve. Watch out for Non-farm payrolls and Unemployment rate from the US today. Definitely today's most important event and will move markets Toyota was out with a loss at 436.93 bln. Yen vs. a profit of 1.72 TN Yen last year. Cuts dividend by 50% and present a very bleak outlook for 2009. FX FX Daily stance Comment EURUSD 0/- Rally can extend to 1.3470 high, but would sell there for re-test of 1.3330-40 EURJPY 0/- 200-day MA suppt holds at 132.40. Seen ranging 132.30-133.80 USDJPY 0/- Looking for a re-test of 99.60, but seen holding for retracement to 98.80-00 GBPUSD 0/- Prefer downside while below 1.5060. Suppt still 1.4960 AUDUSD 0 Still firm but looking tired. May halt at 0.7580-90 temporarily. Suppt at 0.7475-80 Equities Equities Daily stance Comment DAX 0/+ Buy at the break of 4835 targeting 4900. S/L below 4790. FTSE 0/+ Buy at the break of 4424 targeting 4490. S/L below 4380. S&P500 0/+ Buy at the break of 910 targeting 920. S/L below 905. Nasdaq100 0/+ Nikkei225 0/+ Futures Commodities Daily Stance Comment Gold(XAUUSD) 0 Likely suppted at 905. Next res at 925 Silver(XAGUSD) 0/+ Buy dips to 13.75 for a push back abv 14.0 Oil (CLM9) 0/+ Further upside potential to 60+. Buy dips to 56.0, stop below 53.40 FX Options FX-Options Comment EURUSD Buyers of shortdate starting to appear in both directions as the market looks nervous. Spot likely to be choppy over the next few sessions. USDJPY Market is finding buyers along the middle of the curve even though spot is largely rangebound. 6m atms saw an aggressive buyer, also buyers of shortdate downside. AUDUSD Sellers of topside persists and the rest of the curve follows slightly lower. Today's session saw a few buyers of low delta downside. Analysis Disclosure & Disclaimer Saxo Bank A/S shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by Saxo Bank that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades in accordance with the recommendations in an analysis, especially leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses as well as profits, in particular if the conditions mentioned in the analysis do not occur as anticipated. Saxo Bank utilizes financial information providers and information from such providers may form the basis for an analysis. Saxo Bank accepts no responsibility for the accuracy or completeness of any information herein contained. Any recommendations and other comments in Saxo Bank's analysis derive from objective fundamental macro economical and company specific calculations, statistical and technical analysis, and subjective general market assessment. If an analysis contains recommendations to buy or sell a specific financial instrument, such recommendation should be seen as Saxo Bank's opinion that the specific instrument will respectively outperform the relevant market or underperform compared to the market. Saxo Bank's recommendations should statistically correspond to an even distribution between buy and sell recommendations. The recommendations may expire promptly due to market volatility and in general, Saxo Bank does not anticipate its recommendations to be valid more than one month. An analysis will be updated if and only if a market development or other issues relevant to the analysis render a new analysis on the same topic relevant. Saxo Bank's analysis does not cover any specific financial product over time but only products which Saxo Bank's strategy team finds it important to cover at any given point in time. In order to prevent conflicts of interest, Saxo Bank has established appropriate business procedures, incl. procedures applicable to research and analysis to ensure objective research reports. Saxo Bank's research reports have not been discussed with the parties, e.g. issuers of securities, mentioned in the analysis. Saxo Bank is under supervision by the Danish Financial Supervisory Authority. Saxo Bank does not engage in corporate finance activities and accordingly, Saxo Bank's employees, incl. the persons responsible for an analysis, do not receive remuneration associated with investment banking transactions.

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Technical Analysis for Crosses

Daily Forex Technicals | Written by ecPulse.com | May 08 09 06:13 GMT |

GBP/JPY The British pound versus Japanese yen was limited at 150.90 zones below the areas we defined to change our short term bearish anticipation and from there it retraced sharply forming a bearish candlestick pattern that pushed the pair to move below the middle line of the Bollinger bands and below Dema 5. Now we are waiting for a price explosion and we think that it will be to the downside on the short term basis while having a look on the daily close we can notice that it revives our negative prediction. Trading range for today is among key support at 143.40 and key resistance at 152.75. The general trend is to the downside as far as 156.20.remains intact with target at 116.00. Support: 148.40, 147.60, 146.80, 146.20, 145.50 Resistance: 149.90, 150.50, 151.00, 151.50, 152.25 Recommendation: According to our analysis, sell the pair at 149.10 with targets at 146.30 and stop loss at 151.50 EUR/JPY The pair has inclined yesterday placing a temporary high at 133.50 zones whereas it retraced once more as the chart shows that it doesn't have enough momentum to continue up trending, protected by the super cluster resistance zone which consists of 38.2% Fibonacci of the whole medium term rally from 169.90 to 111.96 areas and also the 76.4% Fibonacci of the short term decline from 137.40 to 124.40. Therefore we see that the pair is still gathering the momentum it needs to move to the downside while we note that there is a negative divergence under preparation on the four-hour chart. A continuous close below 132.50 zones will confirm this scenario. Trading range for today is among key support at 129.30 and key resistance now at 135.50. The general trend is to the downside as far as 141.44 remains intact with targets at 100.00 followed by 88.97 levels. Support: 132.50, 131.80, 131.05, 130.50, 129.65 Resistance: 133.15, 133.80, 134.30, 135.00, 135.50 Recommendation: According to our analysis, sell the pair at 133.15 with targets at 130.90 and stop loss at 135.00. EUR/GBP The royal pair couldn't penetrate the short term pivotal support around 0.8760 areas whereas it inclined aggressively forming a clear bullish engulfing candlestick which was able to hit 23.6% and 38.2% Fibonacci correctional levels. Now further inclining actions are expected on the intraday basis as a normal result for the bulls power increasing and also at the same time it is a normal effect for entering the previous broken consolidation zone while Alligator supports the direction from below. Trading range is among the key support 0.8760 and key resistance now at 0.9130. The general trend is to the upside as far as 0.8020 area remains intact with targets at 1.0000 followed by 1.0400 levels. Support: 0.8900, 0.8855, 0.8815, 0.8795, 0.8760 Resistance: 0.8935, 0.8980, 0.9030, 0.9070, 0.9110 Recommendation: According to our analysis, buy the pair at 0.8915 with targets at 0.9005 and stop loss at 0.8840. 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 EURUSD

Daily Forex Technicals | Written by Mizuho Corporate Bank | May 08 09 06:40 GMT |

Comment: Will we ever get lift-off? Bouncing again from the top of the 'cloud' and the nine-day moving average, squeezing to a new recent high at 1.3471. Similar patterns can be seen in a series of major currencies suggesting generalised US dollar weakness this month and eventually the Euro should be dragged higher. A weekly close above 1.3600 should add significantly to current bullish momentum. Strategy: Buy at 1.3400, adding to 1.3245; stop below 1.3090. Add to longs on a sustained break above 1.3475 for 1.3575/1.3600 and more further out. Direction of Trade: →↗ Chart Levels: Support Resistance 1.3342 " 1.3412 1.3245 1.344 1.32 1.3471* 1.3100/1.3090* 1.352 1.3 1.3582* GBPUSD Comment: Retreating from a recent high at 1.5198, just under January's high at 1.5375. Cable should re-group today in order to mount another upside attack next week. A weekly close above 1.5150 should add to bullish pressure, though maybe not convincingly. Strategy: Buy at 1.5015; stop below 1.4800. Add to longs on a sustained break above 1.5200 for 1.5375 short term and then 1.5725/1.5800 Direction of Trade: →↗ Chart Levels: Support Resistance 1.5000 " 1.5055 1.4968/1.4942 1.5115 1.4835 1.5200* 1.47 1.5375* 1.4500* 1.5535 USDJPY Comment: A small 'spike high' yesterday at 99.80 might mean that we hold below here again today and drift down to the Ichimoku 'cloud'. Strategy: Attempt shorts at 99.25; stop above 99.85. Short term target 97.75, maybe 97.15. Direction of Trade: → Chart Levels: Support Resistance 98.94 " 99.42 98.3 99.57 97.94 99.80** 97.7 100 97.15/96.90* 100.74 EURJPY Comment: Conflicting messages as we trade very broadly sideways roughly between 126.00 and 134.00. We feel the latest rally might stall around the 133.00 area but be prepared to be very flexible short term and probably for the whole of this year. Strategy: Attempt small shorts at 133.00; stop above 134.50. Add to shorts on a sustained break below 130.70 for 128.85 and maybe 126.65. Direction of Trade: → Chart Levels: Support Resistance 132.15 " 133.23 130.7 133.58 129.85 134 128.5 134.33/134.50* 126.45* 135.5 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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Afternoon Forex Overview

Daily Forex Fundamentals | Written by Dukascopy Swiss FX Group | May 07 09 14:40 GMT |

The euro hit a one-month high against the dollar Thursday after the European Central Bank announced plans to buy around EUR60 billion in debt securities outright, which gave a further boost to global risk appetite. The announcement by ECB President Jean-Claude Trichet came in addition to the ECB's rate cut Thursday to 1.0% from 1.25%, and helped push the euro to as high as USD1.3441, its highest since Apr. 6. Analysts say that while all the details remain unclear, it is likely an attempt to liquefy Eastern European banks, letting them swap local currency bonds into euro-denominated bonds. Thursday in New York, the euro was at USD1.3421 from USD1.3335 late Wednesday, while the dollar was at JPY99.21 from JPY98.28. The euro was at JPY133.19 from JPY131.01. The U.K. pound was at USD1.5056 from USD1.5140 late Wednesday, while the dollar was at CHF1.1297 from CHF1.1315. U.S. data early Thursday showing a rise in productivity last quarter and a decline in weekly jobless claims had little impact on markets, except perhaps to boost risk appetite more, putting further pressure on the greenback. Meantime, the Canadian dollar is little changed Thursday morning after retreating from a six-month high in earlier trading. The U.S. dollar is currently trading around CAD1.1680 from CAD1.1675 late Wednesday. It has rebounded from a session low at CAD1.1638. Market expectation EURUSD high print was USD1.3471 with the pair backing off as decent selling emerges ahead of the 200d ma. Profit-takers said to take money off the table after buying sub USD1.3300 earlier. EURJPY - easing back from earlier session highs above JPY133.60, though underlying tone seen as positive while above the 200-day moving average, with bulls eyeing a close above (JPY132.65) for the first time since August 2008. Next area of resistance seen placed at JPY134.30 (previous high April 14 and 76.4% retracement of last month's fall). The Canadian currency is supported by higher prices for crude oil and other commodities and strength in stocks, and is expected to remain on a strengthening track, although it's considered vulnerable to temporary setbacks. Dukascopy Swiss FX Group Legal disclaimer and risk disclosure This overview can be used only for informational purposes. Dukascopy SA is not responsible for any losses arising from any investment based on any recommendation, forecast or other information herein contained.

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GBP Weakens on Extension of BoE Debt Monetization Plans. Market so far Shrugging off Modest ECB QE Plans as EUR Rallies.

Daily Forex Fundamentals | Written by Saxo Bank | May 07 09 14:43 GMT |

Australia's positive employment report shocker sees AUD extend rally. Positive spin on US bank stress tests fuels more risk appetite. MAJOR HEADLINES – PREVIOUS SESSION Australia Apr. Employment Change out at +27.3k vs. -25.0k expected Australia Apr. Unemployment Rate fell to 5.4% vs. 5.9% expected, and 5.7% in Mar. Switzerland Apr. CPI out at -0.3% YoY vs. -0.6% expected Sweden Mar. Industrial Production and Orders out at -2.8% and +0.4% MoM Germany Mar. Factory Orders rose 3.3% MoM vs. -1.0% expected UK Bank of England left rates unchanged at 0.50% as expected. EuroZone ECB lower rates 25 bps to 1.00% as expected US Q1 Nonfarm Productivity rose +0.8% vs. +0.6% expected US Q1 Unit Labor Costs rose 3.3% vs. 2.7% expected and 5.7% in Q4 US Weekly Initial Jobless Claims out at 601k vs. 635k expected and 635k the previous week THEMES TO WATCH – UPCOMING SESSION US Apr. ICSC Chain Store Sales (no time given) US Mar. Consumer Credit (1900) US Fed to release results of Bank Stress Tests (2100) Japan Bank of Japan Meeting Minutes (2350) Australia RBA releases quarterly monetary policy statement (0130) Market Comment: The BoE announced plans to purchase another GBP 50 billion of assets - an extension of the GB 75 billion already announced and only 25 billion less than the 150 billion total that the Chancellor has authorized the BoE to print. This threw a bit of cold water on sterling's across the board strength as it had previously basked in the recovery of financial sector assets and much of the overall positive spin coming from the US bank stress tests. This and signs of "less terrible" UK numbers had the market speculating that the BOE might indicate it would not need to extend its asset purchase plans, but today's announcement was a small step from the most dovish scenario (extension of asset purchases by the full additional 75 billion) and the bank's rhetoric on the economy was very pessimistic. Inflation risks were judged minimal by the bank. The long GBP trade seems to have gotten a bit crowded of late, as evidenced in the violent reversal in EURGBP after attempting new lows. The key support for GBPUSD comes in at the 1.5000 level now. The ECB reduced rates 25 bps as widely expected to bring the rate to 1.00%. Mr. Trichet planned remarks outlined an extension of the term of its refinancing operations to 12 months and will extend the liberal collateral rules until the end of 2010. Critically, Mr. Trichet also indicated that the ECB would buy covered bonds, and said during the Q&A portion of the press conference that the technicalities of the bond buying would be outlined at the next meeting and that the amount of the purchases would be approximately EUR 60 billion (consider the small magnitude of this relative to the size of the EuroZone economy compared to GBP 150 billion for the 80%-ish smaller UK economy). When asked whether 1.00% would be the low point for rates, Mr. Trichet said it is not necessarily the lowest point, because it cannot control the trajectory of future conditions, but that it is the appropriate rate for now. So how does this performance from the ECB measure up to expectations in the market. Considering the background of risk willingness in recent weeks, this was a relatively dovish performance from the bank. But considering the expectations originating from the previous meeting, the ECB announcements were relatively inline and the size of the initial move in QE suggests a dipping of toes more than a dramatic plunge. Most importantly, EUR has been a terrible laggard for a couple of weeks or more now and the reaction seems to be more about sell the rumor, buy the fact on QE than anything else. Look at EURAUD for an example of this. Longer term, the driver for EUR will continue to be risk appetite and relative economic performance. The latter and fears of the QE reality have seen the EUR weaker in some of the crosses and on a broader basis until today, and the former will be what puts a halt to the EURUSD and EURJPY rallies. The JPY continues to fall into the abyss with all JPY-negative developments continuing to pressure the currency. Equities are storming ever higher, the bottom has fallen out of the bond market and oil is reaching to strong new highs not seen since last November. The Australian employment data was a shocker, with a drop of the unemployment rate by 0.3% rather than the expected +0.2% rise. This is one of the largest surprise gaps on this kind of figure in recent memory and certainly buttresses the AUD bullish argument, even if other Australian fundamentals don't jibe with this number and we would be very surprised if this number is the beginning of a new trend in the economy Down Under. Note that the weekly US initial claims data was lower than expected and the lowest since late January, a definite positive and lets hope that the coming weeks see further falls in this number as there is already a large additional rise in US unemployment built into the current trajectory and rate of claims. Watch the ICSC Chain Store Sales number later today for an indication on US consumption levels, with private consumption such an important input in the US economy. Also watch for the release of the Fed's US Bank Stress Test release, scheduled for 2100 this evening, GMT. This is a good spot to measure whether we will see a “sell the fact” kind of reaction to the release of the results, though so much has already been leaked and discussed at this point, it is a bit hard to see this as a dramatic event risk trigger. We should be on guard, however. In the end, the stress tests involve all kinds of projections for where the economy is going from here and assumptions about declines in asset values, etc… so the Fed’s projections would be rendered totally meaningless and wrong if the economy double dips and asset values continue to decline and defaults rise. The banks capital reserve levels are only as good as the Fed’s spreadsheets assume them to be . Considering how these kinds of assumptions and models got us all into this mess in the first place, we are as good as flying blind and should take absolutely no confidence away from the Fed’s conclusions. Chart: EURUSD EURUSD manages to overcome the ECB's shift to outright QE so far and may focus on the 200-day moving average around 1.3470. The outlook is clouded by the extent of recent back and forth and this structural resistance. It is difficult to get outright bullish unless we close above the recent highs and stay above there, and the bearish side is fraught with uncertainty until/unless the pair closes back below 1.3250. Again, a turn in equity indices to the downside seems also to be a pre-requisite for any EURUSD bearish outlook. Analysis Disclosure & Disclaimer Saxo Bank A/S shall not be responsible for any loss arising from any investment based on any recommendation, forecast or other information herein contained. The contents of this publication should not be construed as an express or implied promise, guarantee or implication by Saxo Bank that clients will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades in accordance with the recommendations in an analysis, especially leveraged investments such as foreign exchange trading and investment in derivatives, can be very speculative and may result in losses as well as profits, in particular if the conditions mentioned in the analysis do not occur as anticipated. Saxo Bank utilizes financial information providers and information from such providers may form the basis for an analysis. Saxo Bank accepts no responsibility for the accuracy or completeness of any information herein contained. Any recommendations and other comments in Saxo Bank's analysis derive from objective fundamental macro economical and company specific calculations, statistical and technical analysis, and subjective general market assessment. 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In order to prevent conflicts of interest, Saxo Bank has established appropriate business procedures, incl. procedures applicable to research and analysis to ensure objective research reports. Saxo Bank's research reports have not been discussed with the parties, e.g. issuers of securities, mentioned in the analysis. Saxo Bank is under supervision by the Danish Financial Supervisory Authority. Saxo Bank does not engage in corporate finance activities and accordingly, Saxo Bank's employees, incl. the persons responsible for an analysis, do not receive remuneration associated with investment banking transactions.

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Currency Technical Report

Daily Forex Technicals | Written by FX Greece | May 07 09 12:40 GMT |

EUR/USD Resistance: 1,3330-40/ 1,3385/ 1,3410/ 1,3440/ 1,3465/ 1,3500/ 1,3520 Support : 1,3230-40/ 1,3190-00/ 1,3150/ 1,3100/ 1,3080/ 1,3055/ 1,3000 Comment: Euro is forming a sideways consolidation in the short term, after repositioning in the beginning of the week as important announcements are expected today and tomorrow. As we had mentioned in previous analysis, bears gained momentum at the wider area of 1,3400 and a reversal candle was formed in the daily chart. The move, though, was not resumed below important support levels that set the ranges for the short term uptrend, that would confirm the bearish strength. In 4hour and hourly chart, a sideways consolidation is being formed and a downward break will give the confirmation. Important support emerges at 1,3200-30 and a strong move below these levels could lead to 1,3030-50 area, with interim support at 1,3100. An alternative scenario would be that euro moves towards 1,3200-40 during retracements or a weak move below these levels and back to 1,3440 tops. Interim resistance is found at 1,3370 and 1,3400. An upward break of previous tops would lead to a move towards 1,3580-00 at first and even higher, with target at 1,3850-00 (04/05 analysis). Euro's high correlation with stock indexes, which are reaching important resistance levels, is an indication that confirms the downward scenario, as long as these resistance levels are not breached. An upward break could lead to a rise in EUR/USD above important resistance levels. The signs that we have from oil and commodities are positive. As we know, dollar usually moves in the opposite direction to oil and commodities, at least during the basic trend. An important rise in commodities should lead to an important decline in dollar. Oil and other basic commodities these days, have breached important technical resistance levels and this makes us cautious. In the end of today's analysis, we present charts for Dow Jones, DAX, Crude Oil, Reuters/Jefferies CRB Index which shows the commodity prices. As you can see, stock indexes are reaching important resistance levels, the exit of the consolidation in crude oil and the base at CRB index is breached. STRATEGY : We keep positions small before the announcement, while moving within the consolidation. Buy orders at 1,3210-30 should have stops placed below 1,3190. We suggest to refrain from short term positions as high volatility is expected. A downward break of 1,3210-30 will be followed with sell orders and target at 1,3100 and 1,3050. FX Greece DISCLAIMER The details and information included in the above analysis, are part of research based exclusively on currency charts and are of purely instructional and educational nature. None of the information featuring in the analysis can be considered as an invitation for opening positions in FOREX market or in the market of forward contracts or any securities listed on an organized or unorganized market. We assume no responsibility for any kind of losses ,profits or property loss resulting, in whole or in part, from acts that are based either directly or indirectly on the processing or the use of information, details and strategies, the reader may find in the analysis. The readers hold full responsibility for the use and the results of their actions. The recipients of the analysis must acknowledge and accept that investment choices of any kind, especially concerning the FOREX market, contain risks (high, low and occasionally zero) of reduction or even loss of their investment. Therefore, they should always be cautious prior to any kind of action. We reserve the right to change the terms and the characteristics of the analysis. The contents of the analysis are solely intended for personal use. They may not be retransmitted, reproduced, distributed, published, adapted, modified or assigned to third parties in any way whatsoever. Anyone having access to them is required to comply with the law provisions on the protection of third party intellectual property rights.

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Markets Bask In The Light Of Optimism As Aussie And U.S Jobs Figures Bolster Sentiment.

Daily Forex Fundamentals | Written by AC-Markets | May 07 09 09:52 GMT |

Market Brief Yesterday marked yet another step out of the lugubrious climate we have tentatively tried to escape from in the attempt to find a bottom to the global economic crisis. ADP Figures out of the U.S which 'is a measure of nonfarm private employment, based on a subset of aggregated and anonymous payroll data that represents… roughly 24million employees'. Markets were expecting a -645K decline, however the -491K number was a welcomed surprise. The good news didn't stop there, the Aussie jobs reports stunned markets actually rising by 27.3K and beating expectations for a -25K decline. The Aussie dollar stepped over a crucial level at 0.7486 (which is the 38.20% retracement level on the move down from last year's July high at 0.9850). Is the Aussie set to rise to 0.7941 (50% retracement on the same move)? Given that the AUD and NZD are now prone to carry trades. The EURUSD traded a very volatile session as markets await the results of the U.S Treasuries' stress test results they conducted on the 19 largest banks in the country. Early signs point to 10 banks needing recapitalization but Treasury Secretary Tim Geithner assured markets that none of the 19 banks were at risk of insolvency. Expect the dollar to strengthen amidst the good news. Another crucial headline today is the ECB and BoE meetings, both central banks will have to elaborate on the effectiveness of their QE. Furthermore the ECB will probably announce some sort of non-conventional means to address the economic climate in Europe, a move pundits say is long overdue as the bank has been laggard to respond to the global crisis. Japanese stocks rose 4.55% this morning on the encouraging jobs news out of the U.S and Australia. Markets in Asia in general have been on good footing with Hong Kong up 1.8% - which is preempts the European and U.S Sessions. ACM FOREX Disclaimer: This report has been prepared by AC Markets (thereof ACM) and is solely been published for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any currency or any other financial instrument. Views expressed in this report may be subject to change without prior notice and may differ or be contrary to opinions expressed by Salesperson or Traders of ACM at any given time. ACM is under no obligation to update or keep current the information herein, the report should not be regarded by recipients as a substitute for the exercise of their own judgment.

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Forex Technical Analytics

Daily Forex Technicals | Written by FOREX Ltd | May 07 09 09:48 GMT |

CHF The pre-planned long positions from key resistance range levels have been implemented but damaging to several points in the achievement of main anticipated target. OsMA trend indicator marks activity fall of both parties and does not clarify the choice of planning priorities for today. Therefore, considering probability of rate range movement, we can assume probability of the achievement of close 1,1380/1,1400 resistance levels, where it recommended to evaluate development of the activity of both parties in accordance with the charts of a shorter time interval. As for the short-term sales, on condition of the formation of topping signals, the targets will be 1,1320/40, 1,1260/80, 1,1160/1,1200 and (or) further break-out variant up to 1,1100/20, 1,1040/60, 1,0960/80. The alternative for buyers will be above 1,1440 with the targets of 1,1480/1,1500, 1,1560/80. GBP The estimated test of key supports for the implementation of pre-planned long positions has not been exactly confirmed, and the activity fall of both parties as the result of the last trading day gives grounds to suppose further trading principles application within borders of rising trading channel as well as for today. On the assumption of it we can assume probability of rate resumption to close 1,5070/90 supports, where it is recommended to evaluate the development of the activity of both parties in accordance with the charts of a shorter time interval. As for the short-term buying positions on condition of the formation of topping signals the targets will be 1,5140/60, 1,5200/20 and (or) further break-out variant up to 1,5260/80, 1,5320/40, 1,5400/40. The alternative for sales will be below 1, 4980 with the targets of 1,4920/40, 1,4840/60, 1,4760/80. . JPY The estimated test of key resistance range levels has been confirmed, but relative rise of bearish activity marked by OsMA indicator did not incline to the implementation of pre-planned short positions. At the moment, considering parity in activity of both parties within Ichimoku cloud borders we can assume probability of rate range movement with further testing of close 98,80/99,00 resistance levels , where it is recommended to evaluate the development of the activity of both parties in accordance with the charts of a shorter time interval. As for the short-term sales on condition of the formation of topping signals the targets will be 98,20/40, 97,60/80 and (or) further break-out variant up to 97,00/20, 96,40/60.The alternative for buyers will be below 99,60 with the targets of 100,00/20, 100,60/80, 101,20/40. EUR The long positions opened before had positive result in the achievement of main anticipated targets. OsMA trend indicator marks activity fall of both parties and gives grounds to suppose further rate range movement period without clarifying the choice of planning priorities for today. On the assumption of it we can assume probability of testing of close 1,3220/40 supports, where it is recommended to evaluate development of the activity of both parties in accordance with the charts of a shorter time interval. As for short-term buying positions on condition of the formation of topping signals the targets will be 1,3280/1,3300, 1,3340/60 and (or) further break-out variant up to 1,3400/20, 1,3460/80, 1,3540/60. The alternative for sales will be below 1,3180 with the targets of 1,3120/40, 1,3040/60, 1,2960/80. FOREX Ltd www.forexltd.co.uk

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Leaked Bank Stress Tests Fuel Rally

Daily Forex Fundamentals | Written by Easy Forex | May 07 09 01:30 GMT |

U.S. Dollar Trading (USD) struggled as US employment numbers beat expectations and leaked stress test results helped confidence. ADP Employment Report for April came in at -491K vs. -650K forecast. US stocks rallied on improved confidence and commodity surge. Crude Oil was up $2.50 ending the New York session at $56.47 per barrel. In US share markets, the Nasdaq was up 5 points or 0.28% and the Dow Jones was up 101 points or 1.21%. Looking ahead, Weekly Jobless Claims forecast at 635K vs. 631K previously. The Euro (EUR) kept to a tight range as investors were reluctant to follow other currencies higher given the ECB meeting today. Whilst expectations are for a 0.25% cut to 1.0% and the possibility of some form of Quantitative Easing the feeling with most traders is that aggressive action is unlikely. EU Retail Sales (March) fell -0.6% vs. 0.1% forecast. Overall the EUR/USD traded with a low of 1.3245 and a high of 1.3376 before closing at 1.3330. Looking ahead, ECB Rate Announcement forecast 0.25% rate cut followed by news conference with President Trichet. The Japanese Yen (JPY) strengthened with Japan away for the third and final day USD/JPY slipped towards 98 Yen. Crosses managed to remain fairly stable as their respective majors rallied on good sentiment. The BOJ Minutes tomorrow and the Non Farm Payrolls on Friday the major event risk. Overall the USDJPY traded with a low of 97.09 and a high of 99.09 before closing the day around 98.40 in the New York session. The Sterling (GBP) continued its march higher with UK data and Stocks propelling cable to new multi-month highs. EUR/GBP has dropped down to support at 88 as the Euro was sluggish overnight. UK PMI services (Apr) rose to 48.7 vs. 45.5 previously. Overall the GBP/USD traded with a low of 1.4990 and a high of 1.5155 before closing the day at 1.5130 in the New York session. Looking ahead, BOE Rate announcement widely expected to remain at 0.5%. The Australian Dollar (AUD) tested the 0.7500 level on good momentum to the topside. The pair found some resistance but the pullback was shallow as surging commodities helped underpin the move higher. Resistance above 0.7500 is sparce so the pair could quickly move to more noted retracement levels at 0.7700. Overall the AUD/USD traded with a low of 0.7335 and a high of 0.7505 before closing the US session at 0.7480. Looking ahead, April Unemployment is forecast at 5.9% vs. 5.7% previously. April Employment Change is forecast at -25K vs. -34K previously. Gold (XAU) gained on USD weakness although movement is being capped by slipping safe haven demand for the precious metal. Overall trading with a low of USD$895 and high of USD$912 before ending the New York session at USD$911 an ounce. Easy Forex http://www.easy-forex.com Easy-Forex makes no recommendations as to the merits of any financial product referred to in this website, emails or its related websites and the information contained does not take into account your personal objectives, financial situation and needs. Therefore you should consider whether these products are appropriate in view of your objectives, financial situation and needs as well as considering the risks associated in dealing with those products

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Foreign Exchange Market Commentary

Daily Forex Technicals | Written by HY Markets | May 07 09 03:05 GMT |

EUR/USD closed higher on Wednesday and is poised to renew the rally off April's low. The high-range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI remain bullish signalling that sideways to higher prices are possible near-term. If it extends this week's rally, the reaction high crossing is the next upside target. Closes below the 20-day moving average crossing would temper the near-term friendly outlook in the market. USD/JPY closed higher on Wednesday as it consolidates some of last week's decline. The high-range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI remain neutral to bearish signalling that sideways to lower prices are possible near-term. If it extends last week's decline, the reaction low crossing is the next downside target. Closes above the 10-day moving average crossing would confirm that a short-term top has been posted. GBP/USD closed higher on Wednesday as it extends the rebound off last week's low. The high-range close sets the stage for a steady to higher opening on Thursday. Stochastics and the RSI remain bullish signalling that sideways to higher prices are possible near-term. If it extends the rally off April's low, January's high crossing is the next upside target. Closes below the 20-day moving average crossing would signal that a short-term top has been posted. USD/CHF closed higher on Wednesday as it consolidated some of Tuesday's losses. The mid-range close sets the stage for a steady opening on Thursday. Stochastics and the RSI are overbought but remain bullish signalling that sideways to higher prices are possible near-term. If it extends the rally, the reaction high crossing is the next upside target. HY Markets http://www.hymarkets.com

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FX Technical Commentary

Daily Forex Technicals | Written by Easy Forex | May 07 09 01:33 GMT |

Euro 1.3305 Initial support at 1.3121 (Apr 29 low) followed by 1.2964 (Apr 28 low). Initial resistance is now located at 1.3438 (May 5 High) at followed by 1.3582 (Apr 6 high) Yen 98.45 Initial support is located at 97.15 (Apr 30 low) followed by 96.39 (Apr 29 low). Initial resistance is now at 99.75 (Apr 17 high) followed by 100.43 (Apr 14 high). Pound 1.5105 Initial support at 1.4836 (May 4 low) followed by 1.4704 (Apr 30 low). Initial resistance is now at 1.5162 (May 5 high) followed by 1.5373 (Jan 8 high). Australian Dollar 0.7460 Initial support at 0.7300 (May 4 low) followed by the 0.7233 (Apr 30 low). Initial resistance is now at 0.7479 (May 5 high) followed by 0.7560 (61.8% retrace 0.6009 to 0.8519). Gold 910 Initial support at 878 (Apr 21 low) followed by 864 (Apr 17 low). Initial resistance is now at 918 (Apr 27 high) followed by 933 (Apr 1 high). Currency Sup 2 Sup 1 Spot Res 1 Res 2 EUR/USD 1.2964 1.3121 1.3305 1.3438 1.3582 USD/JPY 96.39 97.15 98.45 99.75 100.43 GBP/USD 1.4704 1.4836 1.5105 1.5162 1.5373 AUD/USD 0.7233 0.7300 0.7460 0.7479 0.7560 XAU/USD 864.00 878.00 910.00 918.00 933.00 Easy Forex http://www.easy-forex.com Easy-Forex makes no recommendations as to the merits of any financial product referred to in this website, emails or its related websites and the information contained does not take into account your personal objectives, financial situation and needs. Therefore you should consider whether these products are appropriate in view of your objectives, financial situation and needs as well as considering the risks associated in dealing with those products

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Geithner Says Banks’ Stress-Test Results Will Be ‘Reassuring’

By Michael McKee

May 7 (Bloomberg) -- Treasury Secretary Timothy Geithner said none of the 19 banks subjected to government stress tests are insolvent, which should reassure investors and the public that the U.S. financial system is sound.

While some banks will need to raise more capital, there are a number of ways they can do that and most should be able to do it in the private sector, Geithner said yesterday in an interview with Charlie Rose.

“I think the results will be, on balance, reassuring,” Geithner said. “None of those 19 banks are at risk for insolvency.”

U.S. banks may outline their strategies for adding capital after the Federal Reserve publishes the stress-test results today. The Treasury secretary did not say how many of the 19 will need additional capital.

Geithner said those that do require more funds can raise new common equity from existing shareholders or new investors, convert preferred shares held by private investors or the government into common equity, sell additional assets or, failing that, apply for additional capital from the government.

Bank of America Corp. may need $34 billion, the largest requirement among the biggest banks subjected to the tests, said a person with knowledge of the matter. Citigroup Inc., Wells Fargo & Co. and GMAC LLC are also among the companies judged to need more capital.

Private Capital

Geithner, speaking in Washington, said he expects the “vast bulk” of banks will be able to raise needed capital “through private sources” instead of getting government financing.

“There is very significant cushions in these institutions today, and all Americans should be confident that these institutions are going to be viable institutions going forward,” Geithner said. “What we want to do is make sure that people have confidence that our financial system is going to be able to get through this and going to be able to lend.”

The government will take larger stakes in the banks, either by adding capital or converting preferred shares, “if necessary,” Geithner said, “but we’ll be reluctant to do that” and “we’ll get out as quickly as possible.”

He did not rule out forcing management changes at banks in which the government has a sizeable holding.

Corporate Boards

“We’ll have to make judgments about whether the quality of leadership of those boards is strong enough so that again our interests are met best,” Geithner said. “And our interests are not just as a shareholder, as an investor. We want to make sure the institutions will be strong enough so that we can get out, the private capital will come replace us over time.”

Geithner said he’d welcome banks that want to repay money the government provided through the $700 billion Troubled Asset Relief Program, adding that he expects more than $25 billion will be repaid in the next six to 12 months.

“I think we’ll get significantly more than that back,” Geithner said. “So we have a substantial amount of resources to backstop the system.”

Several banks, including Goldman Sachs Group Inc. and JPMorgan Chase & Co. have said they want to repay TARP funds immediately. If the stress test shows they have enough capital they will be allowed to do that, Geithner said, provided they can borrow in the market without using a Federal Deposit Insurance Corp. guarantee.

Although a big reason the banks want to repay the funds is to end government restrictions on their compensation practices, Geithner suggested the administration is still looking to set parameters for pay at financial institutions.

Excessive Pay

“We had a period where compensation packages just became completely unmoored from reality,” he said. “We’re not going to go back to that system.”

Bank supervisors and the Securities and Exchange Commission will set out “broad standards and principles” for compensation, Geithner said. While they won’t put limits on pay, government has to ensure compensation incentives “don’t create too much risk of excessive risk-taking in the future.”

Release of the stress tests will help the Treasury’s Public-Private Investment Program, designed to help remove bad assets from bank balance sheets by offering government loans to investors willing to purchase them, Geithner said.

Because banks will want to raise capital, “they’ll have strong incentive” to sell those assets at reasonable prices, Geithner said. The PPIP should be “up and running in the next four to six weeks.”

Recession

The biggest U.S. banks went through stress tests to see how they’d weather a broader downturn in a recession that started in December 2007.

The economy shrank at a 6.1 percent annual pace in the first three months of the year, after contracting 6.3 percent in the fourth quarter of 2008. About 5.1 million jobs have been lost since the recession began in December 2007, marking the biggest employment drop in any postwar economic slump.

Geithner said he sees “important signs of some stability” returning to the economy.

A private report yesterday showed companies in the U.S. cut an estimated 491,000 workers from payrolls in April, indicating the worst of the recession’s job losses may have passed. The drop in the ADP Employer Services gauge was smaller than economists forecast and the fewest since October.

“Things feel a little better; people sense a bit more stability and you can see it in behavior,” Geithner said, noting “sustained, day-by-day, week-by-week improvement in consumer and business confidence now for several weeks.”

‘Uncertainty’

Geithner tempered his optimism by saying there’s “a lot of pain across this country” and still “enormous uncertainty.” The nation’s unemployment rate, which reached a 25-year high of 8.5 percent in March, may still rise as the economy recovers.

“It’s not going to feel dramatically better for a while.”

Geithner called the Fed’s outlook for “slightly positive” growth in the second half of this year and an expansion that will “strengthen” next year a “good, independent, credible forecast.”

“The pace of decline is slowing, here and around the world,” Geithner said. “The main thing is a sense of stability.”

Geithner said the economy doesn’t need another stimulus package “at this stage, but that’s something we’ve got to keep an eye on carefully.” Governments have made mistakes in the past by removing extraordinary aid to growth before recovery fully takes hold, he said.

To contact the reporter on this story: Michael McKee in New York at mmckee@bloomberg.net.

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Singapore to Refine Islamic Finance Rules to Boost Industry

By Shamim Adam

May 7 (Bloomberg) -- The Monetary Authority of Singapore said it plans to refine its Islamic finance regulations to boost the industry, betting demand will grow as investors seek alternative assets.

There’s still interest in bonds and other products that comply with Muslim Shariah law amid the global financial crisis, the central bank’s Managing Director Heng Swee Keat said in an interview in Singapore yesterday. The city state will maintain its regulation standards as it grows its Islamic finance market, he said.

“Maintaining a very high standard of regulation is a very important part of this whole development effort,” Heng said. “It’s undesirable to pull the shoots to get it to grow faster. It has to be organic.”

Rising oil wealth and government initiatives have turned Islamic banking and insurance into an industry with $1 trillion in assets globally. Singapore, among Asian nations seeking a larger share of Muslim wealth, is giving incentives for Islamic services as it encourages financial institutions to introduce more products that comply with Shariah law.

“We’ll issue a consolidated set of guidelines to clarify the treatment of Islamic financial activities and how our regulatory rules apply,” Heng said. “We want to make sure that the ground is fertile for various forms of activities.”

Central bank officials from the Middle East and Asia are gathering in Singapore this week for the annual Islamic Financial Services Board summit to discuss the direction and development of the industry.

Sukuk Program

Singapore announced a sukuk, or Islamic bond program, in January as it sought a larger pool of international investors. It issued the debt to the Islamic Bank of Asia, and is “evaluating” requests from others for more of the bonds, Heng said yesterday.

Sales of sukuk worldwide plunged in 2008 as tumbling crude oil prices sapped demand from the Middle East, falling to $13.9 billion from a record $31 billion in 2007, according to data compiled by Bloomberg. Sales have reached $3.4 billion so far this year.

About $1.5 billion of sukuk bonds may be issued in Indonesia, Malaysia and Singapore this year, Heng said.

“That’s not a bad development considering the state” of the global economy, Heng said. “It shows a certain fundamental momentum.”

Indonesia’s first international sale of dollar sukuk drew orders for $4.7 billion, seven times the $650 million of securities on offer, the nation’s debt management office Director General Rahmat Waluyanto said April 17.

Islamic REITs

In June 2008, the Singapore monetary authority said it was seeking to develop a market in Islamic real-estate investment trusts to attract funds from the wealthy in Asia and the Middle East. That may be delayed and the central bank has no plans to hurry the development, Heng said.

“It’s not a good time because the global property market has come down significantly,” he said. “It’s really up to the investors and the financial institutions as they assess the demand for this.”

The central bank is also planning to issue more licenses for Shariah-compliant funds, depending on demand for the products, Heng said.

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

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