By Gavin Finch
Oct. 7 (Bloomberg) -- The pound erased its decine against the dollar to trade little changed at $1.5917 as of 8:30 a.m. in London.
To contact the reporter on this story: Gavin Finch in London at gfinch@bloomberg.net
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Wednesday, October 7, 2009
Gold Near Record, Oil Climbs as Dollar May Drop, Inflation Gain
Gold Near Record, Oil Climbs as Dollar May Drop, Inflation Gain
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By Kim Kyoungwha
Oct. 7 (Bloomberg) -- Gold traded near its record and oil advanced for a third day as investors bought commodities to protect their wealth on speculation the dollar will extend its decline and inflation accelerate.
Gold for immediate delivery traded 0.5 percent below the record $1,043.78 yesterday as Asian stocks gained for a second day and the dollar was near the lowest level in almost two weeks against the euro. Australia unexpectedly increased interest rates yesterday on signs of strength in the economy.
The Reuters/Jefferies CRB Index of 19 raw materials rose 13 percent this year, rebounding from its worst year in a half century, led by robust demand from China. The Baltic Dry Index, regarded by some investors as a proxy for shifts in commodity demand, posted a fifth consecutive gain, the longest winning streak in almost a month.
“Eventually inflation will come; commodities always win in inflation,” said Ghee Peh, head of Asian mining research with UBS Securities Asia Ltd. in Hong Kong. “We’re going to have a weak dollar until the U.S. economy sorts out its problem.”
Gold for immediate delivery traded at $1,038.50 an ounce at 11:51 a.m. in Singapore compared to yesterday’s record of $1,043.78. Crude oil for November delivery rose 63 cents, or 0.9 percent, to $71.51 a barrel, in electronic trading on the New York Mercantile Exchange.
The dollar is coming under pressure as speculation that the Federal Reserve will trail other central banks in raising interest rates made the greenback less attractive. The dollar traded at $1.4704 per euro at 2:53 p.m. Sydney time from $1.4722 yesterday.
Inflation Concern
Gold has risen 18 percent this year as governments boost spending to pull their economies out of recession, sparking speculation rising money supply will debase paper currencies.
“The uptrend remains intact given that rate hikes to come show inflation will build up, fanning demand for gold,” said Kim Jae Jun, a trader at Eugene Investment & Futures Co. in Seoul. Today’s move was a “minor consolidation,” and gold will rise to $1,100 an ounce by the end of 2009, Kim said.
Newcrest Mining Ltd., Australia’s biggest gold-mining company, paced producers’ gains, rising as much as 7.5 percent to A$35.40 on the Australian stock exchange. Lihir Gold Ltd. added as much as 6.1 percent to A$3.15.
“There’s talk of inflation re-emerging and continuing weakness in the U.S. dollar, which suggests the gold price may well continue to climb higher,” said William Seddon, who helps manage about $300 million at White Funds Management in Sydney.
Oil Gains
Crude-oil futures, used by some investors to forecast trends in inflation, have soared 60 percent in New York this year. The “fragility of the U.S. dollar” was also supportive of the oil price, said David Moore, commodity strategist at Commonwealth Bank of Australia in Sydney.
Among other commodities, three-month delivery copper fell 0.4 percent to $6,088 a metric ton on the London Metal Exchange. Corn for December delivery fell 0.2 percent to $3.575 a bushel in electronic trading on the Chicago Board of Trade, a day after gaining the most in three weeks to a two-month high.
To contact the reporter on this story: Kyoungwha Kim in Singapore at Kkim19@bloomberg.net
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Asian Stocks Gain as Gold Rises to Record; BHP, Newcrest Climb
By Shani Raja
Oct. 7 (Bloomberg) -- Asian stocks rose for a second day, led by mining companies and banks, as gold prices surged to a record and brokerages upgraded companies including Sumitomo Mitsui Financial Group.
BHP Billiton Ltd., the world’s biggest mining company, gained 3.4 percent and gold producer Newcrest Mining Ltd. surged 6.5 percent in Sydney. The country’s benchmark index posted its biggest gain in six weeks after the central bank raised interest rates, saying the justification for low rates “has now passed.” Sumitomo Mitsui Financial Group Inc. jumped 6.7 percent in Tokyo after Nomura Holdings Inc. raised its share-price target.
“The improvement in Asian stocks can be attributed to further evidence the global economy is on the mend,” said Tim Schroeders, who helps manage $1 billion at Pengana Capital Ltd. in Melbourne. “Investors waiting for a pullback to increase equity exposure continue to be disappointed.”
The MSCI Asia Pacific Index gained 1.5 percent to 117.36 as of 1:59 p.m. in Tokyo, extending yesterday’s 1.7 percent advance. The gauge has risen 63 percent in the past seven months on signs the global economy is emerging from its worst slowdown since World War II.
Australia’s S&P/ASX 200 Index climbed 2.4 percent, set for its biggest gain since Aug. 24. It rose 0.4 percent yesterday after the central bank’s unexpected interest-rate increase. Crane Group Ltd., the country’s biggest distributor of plumbing supplies, gained 2.1 percent on a Credit Suisse Group AG upgrade.
U.S. Earnings
Japan’s Nikkei 225 Stock Average increased 1.2 percent as Hitachi Ltd., a nuclear reactor maker, added 8.4 percent after Mizuho Securities Co. raised its recommendation and Mitsui O.S.K. Lines Ltd. advanced 3.9 percent after a gauge of shipping fees increased the most since July. Hong Kong’s Hang Seng Index rose 1.9 percent, while Taiwan’s Taiex Index gained 0.6 percent.
Futures on the U.S. Standard & Poor’s 500 Index added 0.3 percent. The gauge added 1.4 percent yesterday on speculation third-quarter earnings will top estimates. Alcoa Inc. is scheduled to release third-quarter results later today, the first company in the Dow Jones Industrial Average to report.
Material stocks accounted for 21 percent of the MSCI Asia Pacific Index’s advance today after gold futures climbed as much as 2.7 percent to a record $1,045 an ounce in New York, while copper increased for a second day with a 2.1 percent increase. Crude oil rose 0.7 percent.
BHP gained 3.4 percent to A$37.91, while Rio Tinto Group, the world’s third-largest mining company, climbed 5.2 percent to A$60.75. Newcrest, Australia’s largest gold producer, jumped 6.5 percent to A$35.08. Inpex Corp., Japan’s largest oil explorer, rose 2.7 percent to 753,000 yen.
Dollar Decline
Raw-material prices climbed as the dollar’s decline spurred demand for commodities as a hedge against inflation. The Dollar Index, which measures the U.S. currency against six major counterparts, traded near a two-week low as speculation the Federal Reserve will trail other central banks in raising interest rates made the greenback less attractive.
“Commodities are priced in dollars and a weak U.S. currency inevitably raises their prices,” said Yoji Takeda, who manages the equivalent of $1.1 billion at RBC Investment (Asia) Ltd. in Hong Kong. “Gains in commodities are generally positive for resource companies.”
The dollar weakened to as much as 88.65 yen from 88.98 at the 3 p.m. close of Tokyo stock trading yesterday. The U.S. currency’s decline came as Australia’s surprise interest-rate hike yesterday boosted demand for higher-yielding assets.
Signs of Growth
The Reserve Bank of Australia’s decision to lift the overnight cash rate target to 3.25 percent from a 49-year low of 3 percent followed the first expansion this year in U.S. service industries. Manufacturing in emerging markets increased the most in the past three months since the second quarter of 2008, according to the HSBC Emerging Markets Index of data from purchasing managers.
Speculation of a global recovery has driven the MSCI Asia Pacific Index up by 66 percent from a more than five-year low on March 9. That’s lifted the average price of companies on the gauge to 23 times estimated earnings from 21 times at this year’s trough.
“The weight of conviction is edging towards the recovery view,” said Michael Auyeung, who manages about $500 million as chief investment officer at Pacific Mutual Fund Bhd. in Petaling Jaya, outside Kuala Lumpur. “The stop-start nature of some of the economic data flows should be expected, but the trends are discernibly more to the upside.”
Japanese Banks
Sumitomo Mitsui, Japan’s second-largest publicly traded bank by market value, jumped 6.7 percent to 3,370 yen, while market leader Mitsubishi UFJ Financial Group Inc. climbed 6.1 percent to 504 yen. Nomura raised its price estimate on Sumitomo Mitsui by 8.9 percent to 4,900 yen, saying the bank was starting to cut costs to boost profit.
Hitachi climbed 8.4 percent to 296 yen after Mizuho Securities raised its investment rating on the company to “strong buy” from “hold.” Australia’s Crane rose 2.1 percent to A$10.76 after Credit Suisse upgraded the stock to “neutral” from “underperform.”
Mitsui O.S.K., Japan’s No. 2 shipping line, added 3.9 percent to 537 yen. Smaller rival Kawasaki Kisen Kaisha Ltd. gained 3.9 percent to 343 yen. The Baltic Dry Index, a measure of shipping costs for commodities, rose 3.3 percent yesterday in London, the steepest climb since July 16.
To contact the reporter for this story: Shani Raja in Sydney at sraja4@bloomberg.net.
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S&P 500 May Retreat as Bank Advance Weakens: Technical Analysis
By Elizabeth Stanton
Oct. 7 (Bloomberg) -- Banks and technology companies that outpaced the Standard & Poor’s 500 Index as it rose from a 12- year low are beginning to lose momentum, suggesting the market may retreat 10 percent, according to MKM Partners.
A gauge of 79 financial companies in the S&P 500 is beating the broader index by 1 percentage point since Aug. 5, while technology stocks are exceeding it by 0.7 point, data compiled by Bloomberg show. Between March 9 and Aug. 5, the bank gauge added 126 percent, the computer measure rose 58 percent, and the S&P 500 climbed 48 percent, the data show.
“The loss of relative strength is something that supports a correction,” Katie Stockton, chief market technician at Greenwich, Connecticut-based MKM, said in an interview. “What happens on a relative basis is often an early indication of what might happen on an absolute basis.”
Technology and financial stocks are the largest of the 10 industry groups in the S&P 500. Financial shares led the index’s rebound since March 9 as credit markets thawed and the biggest U.S. banks said they were profitable to start the year. Technology shares are the best-performing industry in 2009 as investors buy companies that sell products in faster-growing markets outside the U.S.
A retreat by the S&P 500 would likely stop before it reached 945, a 10 percent drop from yesterday’s close. That level is significant, Stockton said, because it’s near the S&P 500’s intraday high on Jan. 6, which remained its peak for the year until June 1 as the index plunged as much as 29 percent.
Stochastics Range
The end of the retreat might coincide with a majority of stocks in the S&P 500 falling too fast relative to a recent trading range defined as “stochastics,” Stockton said. About 35 percent of the S&P 500 companies are oversold based on stochastics, she said. Investors should wait for an increase to 55 percent “before diving back in,” she said.
Following the correction, the S&P 500 is likely to rally to at least 1,220, a 16 percent rally from today’s close, Stockton said.
A decline is likely in the next two weeks because the S&P 500 last month had what technical analysts such as Stockton, who base predictions on price and volume charts, term a failed breakout. The index closed above 1,054, a key resistance level, on the third Friday of the month, then failed to top it at the close on either of the next two Fridays.
“Usually failed breakouts are followed by corrections,” Stockton said. “Combine that with October’s seasonality being quite weak, and I think the market’s set up for a correction this month.”
Some of the biggest declines in U.S. stock market history occurred during the month of October, including the crashes of 1929 and 1987. The S&P 500 fell 17 percent last October, its worst month of 2008.
To contact the reporter on this story: Elizabeth Stanton in New York at estanton@bloomberg.net
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Australia Helped by Rate Increase as Stocks Advance
By Eric Martin
Oct. 7 (Bloomberg) -- Mining companies and brewers are benefiting from an Australian economy that is growing so fast the central bank suddenly raised interest rates, buoying the currency and giving global investors another reason to favor Down Under among the world’s hottest markets.
Huntington Asset Advisers’ Madelynn Matlock bought shares of Foster’s Group Ltd., the nation’s largest beermaker, on speculation consumer spending will increase. Scott Davidson of Absolute Asia Asset Management Ltd. said his company may add to holdings such as BHP Billiton Ltd. and Rio Tinto Group as metals rise. Money managers say the S&P/ASX 200 Index is poised to extend gains as it heads for the steepest annual return since 1993, beating equity gauges for the U.S. and world.
“If you bought stocks that you thought were exposed to economic growth, you can feel more confident that you made the right decision,” said Matlock, manager of the International Equity Fund at Huntington, which oversees $15 billion. “What the Australian central bank is tacitly saying is we’re pretty confident our economy is on firm-enough footing to withstand an increase in rates.”
Australia raised its benchmark rate yesterday, becoming the first country in the so-called Group of 20 nations to boost borrowing costs since the start of the credit crisis, after it avoided a recession and Reserve Bank Governor Glenn Stevens said the “risk of serious economic contraction” had passed. Gross domestic product will rise 0.7 percent this year, bucking the 3.4 percent slide for advanced economies, the International Monetary Fund said last week.
Stocks, Dollar
The S&P/ASX 200 added 0.4 percent yesterday and the local currency jumped to the highest level in 14 months after Stevens increased the overnight cash rate target to 3.25 percent from 3 percent. Only one of 20 economists surveyed by Bloomberg News forecast the move. The S&P/ASX 200 climbed 1.4 percent to 4,657.40 as of 12:30 p.m. in Sydney today.
Signs the worldwide recession is easing have helped push the Australian measure up 23 percent this year, exceeding gains of 22 percent in the MSCI World Index and 17 percent in the Standard & Poor’s 500 Index. The S&P/ASX 200 plunged 54 percent from a record 6,828.7 on Nov. 1, 2007, mirroring declines that erased $37 trillion from global equity markets.
Stevens said the nation is likely to expand “close to trend over the year ahead,” and inflation will remain near the bank’s target range of between 2 percent and 3 percent. He cut the benchmark rate by a record 4.25 percentage points between September 2008 and April to cushion Australia against fallout from the global credit squeeze.
Currency Gains
The Australian dollar rose to 88.94 U.S. cents as of 4:27 a.m. in Sydney from 87.62 cents just before the decision was announced. The two-year government bond yield gained 4 basis points to 4.39 percent. A basis point is 0.01 percentage point.
Matlock, based in Cincinnati, said stocks dependent on consumer spending were cheap after A$20 billion in government handouts to households helped fuel a 1 percent expansion in Australia’s GDP in the first half of this year. The S&P/ASX 200 Consumer Discretionary Index traded for 4.7 times annual earnings last November, the lowest since at least 2001, according to data compiled by Bloomberg.
Matlock, who declined to discuss specific holdings, owns shares of Foster’s, according to Bloomberg data. The brewer climbed 13 percent from a nine-month low in April after turning profitable in the six months ended in June thanks to higher sales of new beers such as Pure Blonde.
Too Cheap
“We felt there was going to be growth in the economy based on consumer activity, and the market was discounting something less than what we’re likely to see,” Matlock said.
Davidson, director of research at Absolute Asia, said his firm owns BHP and Rio Tinto, which climbed 20 percent and 93 percent this year, respectively, as copper prices doubled. Davidson’s company is considering investing more money in Australia, he said in a telephone interview.
“Domestic economic conditions are favorable, and we’re also encouraged about the outlook for commodities,” said Davidson, whose firm manages more than $800 million as director of research at Absolute Asia in Singapore.
Computer makers and financial companies have gained the most on the Australian Stock Exchange this year, climbing 45 percent and 32 percent, respectively. Melbourne-based consultant SMS Management & Technology Ltd. added 193 percent, including a 7.8 percent advance on Aug. 19 after Credit Suisse Group AG raised the stock to “neutral” from “underperform.”
Financial Index
Six of the 10 best-performing shares in the S&P/ASX 200 Financial Index are real-estate firms, including Rhodes, New South Wales-based Australand Property Group, a developer of residential land. Macquarie Group Ltd., the Sydney-based investment bank that lost 62 percent last year, has rebounded 84 percent in 2009 for the financial index’s eighth-best advance.
In contrast with the U.S. and euro region, property values in Australia have climbed this year. House prices increased 7.9 percent in the first eight months of 2009, RP Data-Rismark, a property-monitoring company, reported Sept. 30.
The economy is forecast to post just one quarter of contraction since more than $1.6 trillion of global credit losses spurred the first simultaneous recessions in the U.S., Europe and Japan since World War II. After shrinking 0.6 percent in the third quarter, Australia will grow 2.3 percent next year and 3.5 percent in 2011, economists’ estimates compiled by Bloomberg show.
The central bank may have acted too soon because the world economy is still in a recession, according to Prasad Patkar, a fund manager at Platypus Asset Management. Higher interest rates may stymie the recovery, he said.
‘Too Early’
“There’s a risk that they’ve gone too early,” said Patkar, who helps manage $1.2 billion at Platypus in Sydney. “The Australian economy has done quite well compared with what was expected of it, but the risk is potentially from a much weaker than expected global economy.”
Stevens said yesterday that future rate increases will be done “gradually.” A report today will show the unemployment rate rose to 6 percent last month from 5.8 percent, according to the median estimate in a Bloomberg News survey.
The Reserve Bank scrapped its forecast in August for the economy to contract this year, instead predicting GDP will jump 0.5 percent. The bank expects growth will accelerate to 2.25 percent in 2010 and 3.75 percent in 2011.
“What probably surprised people was the optimism on the outlook for the economy,” said Michael Kerley, director of pan- Asian equities at Henderson Global Investors Ltd., which oversees about $3 billion in the Asia-Pacific region, in a phone interview. “If that proves right, the domestic story in Asia looks pretty solid.”
To contact the reporter on this story: Eric Martin in New York at emartin21@bloomberg.net.
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Tuesday, October 6, 2009
Australia Lifts Key Rate From 49-Year Low, Signals More to Come
By Jacob Greber
Oct. 6 (Bloomberg) -- Australia’s central bank unexpectedly raised its benchmark interest rate from a 49-year low and signaled further increases in coming months amid signs the economy is strengthening.
Reserve Bank Governor Glenn Stevens increased the overnight cash rate target to 3.25 percent from 3 percent in Sydney today. Only one of 20 economists surveyed by Bloomberg News forecast today’s move. The rest predicted no change.
The local currency jumped as Australia became the first Group of 20 nation to raise borrowing costs since the start of the global financial crisis more than a year ago. Rising job vacancies, retail sales and house prices, plus surging business and consumer confidence support Stevens’ view that the “basis for such a low interest rate setting has now passed.”
“It’s quite a pre-emptive move,” said Su-Lin Ong, senior economist at RBC Capital Markets Ltd. in Sydney. “They’re very comfortable the globe is returning to firmer growth, particularly Australia’s key trading partners in Asia.
‘‘There are a few more hikes ahead.”
The Australian dollar rose to 88.34 U.S. cents at 3:10 p.m. in Sydney from 87.62 cents just before the decision was announced. The two-year government bond yield gained 5 basis points to 4.40 percent. A basis point is 0.01 percentage point.
Governor Stevens, who cut the benchmark lending rate by a record 4.25 percentage points between September 2008 and April to cushion Australia against fallout from the global credit squeeze, said today that the economy is likely to expand “close to trend over the year ahead,” and inflation will remain near the bank’s target range of between 2 percent and 3 percent.
Risk Has Passed
“The risk of serious economic contraction” in Australia has passed, Stevens said in a statement.
“The board’s view is that it is now prudent to begin gradually lessening the stimulus provided by monetary policy,” he added. “This will work to increase the sustainability of growth in economic activity and keep inflation consistent with the target over the years ahead.”
Today’s increase means households with an average-sized mortgage of A$250,000 ($221,000) will pay an extra A$40 a month in repayments.
Jane Counsel, a spokeswoman for Westpac Banking Corp., Steve Batten, a spokesman for Commonwealth Bank of Australia, and Luisa Ford, a spokeswoman for National Australia Bank Ltd., said the banks are currently reviewing their interest-rate settings. A spokesman for Australia and New Zealand Banking Group Ltd. was unable to comment immediately.
Global Rates
Speculation that Stevens would move faster than policy makers in the U.S., Europe and Japan to raise borrowing costs has helped stoke this year’s 26 percent gain in the nation’s currency.
Indonesia’s central bank kept interest rates unchanged for a second month yesterday and the European Central Bank will leave its benchmark rate at a record low of 1 percent on Oct. 8, according to analysts surveyed by Bloomberg. The U.S. Federal Reserve left the rate for overnight loans between banks at a record low of between zero and 0.25 percent on Sept. 24.
“The Reserve Bank has flagged there may be more to come,” Treasurer Wayne Swan told reporters in Canberra today. There is “no doubt” Australia’s economy is recovering.
Reports last week showed retail sales, approvals to build private homes, bank mortgage lending and property prices all jumped in August. Advertisements for job vacancies rose in September for a second straight month, gaining 4.4 percent.
‘Consumer Shock’
A report on Oct. 8 will show the unemployment rate rose to 6 percent last month from 5.8 percent, according to the median estimate of 20 economists surveyed by Bloomberg. By contrast, Europe’s jobless rate climbed in August to a 10-year high of 9.6 percent, and reached 9.7 percent in the U.S., the highest level since 1983.
“Overall, growth through 2010 looks likely to be close to trend,” Governor Stevens said. “Unemployment has not risen as far as had been expected.”
The bank’s decision will be “a shock for consumers in particular and those first-home buyers who have been borrowing pretty big,” said Stephen Walters, chief economist at JPMorgan Chase & Co. in Sydney, who forecast today’s move. “I think the Reserve Bank will move quite slowly” on future moves with quarter-point increases “every couple of months or so.”
Consumer spending, stoked by A$20 billion in government cash handouts to households, helped fuel a 1 percent expansion in Australia’s gross domestic product in the first half of this year.
Stock, House Prices
The government is also boosting domestic demand by spending an extra A$22 billion on roads, railways, ports and schools.
There are increasing signs the stimulus is starting to drive up asset prices. The nation’s benchmark S&P/ASX 200 index of stocks has surged more than 20 percent this year, and a report published on Sept. 30 by property monitoring company RP Data-Rismark showed house prices climbed 7.9 percent in the first eight months of this year.
“Housing credit growth has been solid and dwelling prices have risen appreciably over the past six months,” Stevens said today.
The Reserve Bank scrapped its forecast in August for the economy to contract this year, instead predicting GDP will rise 0.5 percent. The bank expects growth will accelerate to 2.25 percent in 2010 and 3.75 percent in 2011.
“There’s a risk they’ve gone too early,” said Prasad Patkar, who helps manage about $1.2 billion at Platypus Asset Management in Sydney. “The recovery may not be all that well entrenched and yet they’re starting to unwind the stimulus.”
To contact the reporter for this story: Jacob Greber in Sydney at jgreber@bloomberg.net
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FX Daily Report
| Daily Forex Fundamentals | Written by swiss pb | Oct 06 09 05:59 GMT | | |
| The need to rebalance the global economy does not at all mean the dollar should depreciate against the euro, European Central Bank President Jean-Claude Trichet said on Monday. Many economists think the United States' huge trade and budget deficits mean the dollar may have to fall. But Trichet took pains to stress that the euro should not have to bear part of that adjustment. Trichet and some other European officials, particularly the French, have expressed concern in the last few weeks that excessive strength of the euro could hurt the region's exports. The euro has risen about 14 percent against the dollar since March and, at around $1.46, is not far from its record high of $1.6038, hit in July 2008. Asked what action might be taken to stop the dollar falling, Trichet said the G7 statement spoke for itself, adding that he put faith in assurances by U.S. policymakers that they wanted a strong dollar. Asked if the ECB was prepared to raise interest rates in the euro zone before unemployment peaked, as part of its strategy to unwind monetary policy measures taken during the financial crisis, Trichet replied that current rates were appropriate. A tepid economic recovery should allow the U.S. Federal Reserve to keep interest rates at rock-bottom lows for a prolonged period, New York Federal Reserve President William Dudley said on Monday. Because the U.S. economy faces many headwinds, including an anemic labor market and a fragile banking system, Dudley said, inflation will not become a problem in the foreseeable future. Japan's government urged the central bank on Tuesday not to end support for corporate funding too soon, with the finance minister saying the Bank of Japan needed to carefully consider the economic outlook and monitor funding. The outspoken banking minister went further, saying it was too early to discuss ending the funding support, amid growing expectations that the central bank will end schemes for buying commercial paper and corporate bonds in December. Finance Minister Hirohisa Fujii described the economy as unstable and said the BOJ was at a stage where it should appropriately monitor the situation for corporate funding EUR/USD: If the pair breaks important resistance at 1.4720, next target 1.4800 - 1.4820. Small correction till 1.4660 level is possible. Prefer buy in 1.4700 - 1.4670 area for target 1.4800. Stop loss below 1.4640. GBP/USD: The same strategy as yesterday. Prefer buy moving down till 1.5950. Stop loss below 1.5920, target 1.6100. USD/JPY: The pair could not break resistance at 90.00 yesterday and moved down till 88.95 level. Prefer sell rally till 89.40 for target 88.60. Stop loss above 90.00 USD/CHF: Prefer sell rally till 1.0330 for target 1.0220. Stop loss above 1.0350 Disclaimer To the extent allowed by applicable law, swiss pb, its employees and partners disclaim without reservation any liability for direct, indirect or consequential damage and/or losses of any kind whatsoever arising from use of fact sheets, reports or access to the swiss pb website or from links to the websites of third parties. Furthermore, swiss pb disclaims without reservation any liability for damage to or influences on the internet user's IT system. In this regard, swiss pb particularly wishes to alert all visitors and users of the swiss pb website to the danger of viruses and the possible presence of hackers in Internet traffic and in telecommunications in general. swiss pb expressly recommends the use of the latest versions of browsers and the installation of regularly updated anti-virus software, and advises against opening e-mails and their attachments from unknown senders. Performance Past results and performance form no reliable basis for decisions regarding future investments and yield expectations. The value of investments can go up as well as down. Exchange rate fluctuations can likewise result in a loss of value. swiss pb can therefore undertake no guarantee that the value of invested capital will be preserved or increase. | |
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Daily Technical Outlook
| Daily Forex Technicals | Written by Innerfx | Oct 06 09 05:53 GMT | | |
EURUSDThe euro recovered on yesterday and continued to climb higher during today's Asian trading session. Upside remains favored and a daily close above 1.4700 would confirm the end of the corrective cycle from 1.4845 to 1.4480. Intra-day sentiment is also positive and won't change as long as 1.4650/70 will provide support on pullbacks. Since there aren't any solid resistance levels until the ytd high at 1.4845, extended gains should be easily achieved if the support into the 1.4670/00 region will be confirmed. Current quote is 1.4720 @05:30 GMT Support: 1.4670, 1.4600 and 1.4500/20 GBPUSDBoth intra-day and short-term charts show signs of indecision as cable fails to follow euro's performance against the dollar nowadays. While the pound trades on a fragile ground and shows clear signs of weakness across the board, upside seem slightly favored and the pound is getting away from the support zone around 1.5800. However, it is far from trading into a safe zone so look for the same indecisive behavior as long as the pair holds below the 1.62-1.63 region. Current quote is 1.5995 @05:30 GMT Support: 1.5900, 1.5950 and 1.5800 USDJPYDownside is under heavy pressure as the dollar currently trades only 100 points above last week's low. Both short-term and intra-day studies are negative and the dollar doesn't show any signs of recovery. On potential dollar gains, look for resistance into the 89.50/65 region then above, at 90. A minor support is formed by an upward trend line around 88.75, as seen on the chart attached below. Current quote is 88.95 @05:30 GMT Support: 88.75, 88.00/25 and 87.20/50 Legal disclaimer and risk disclosure InnerFX and/or its author(s) shall not be responsible for any loss arising from any investment or trading decision based on any recommendation, forecast, strategy or other information herein contained. The contents of this article should not be construed as an express or implied promise, guarantee or implication by InnerFX and/or its author(s) that readers and subscribers will profit from the strategies herein or that losses in connection therewith can or will be limited. Trades in accordance with the recommendations / strategy 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. Trading in the Currency Exchange market is a challenging opportunity where above average returns are available to educated and experienced investors who are willing to take above average risk. Past performance does not guarantee similar performance in the future. Check http://www.innerfx.com/disclaimer for full disclaimer. You may not post this (or part of this) article to forums, newsgroups, mailing lists, electronic bulletin boards, websites, or other services, without the prior written consent of InnerFX. | |
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Foreign Exchange Market Commentary
| Daily Forex Technicals | Written by HY Markets | Oct 06 09 03:47 GMT | | |
| EUR/USD closed higher on Monday and above the 10-day moving average crossing. The high-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are turning neutral hinting that a short-term low might be in or is near. Multiple closes above the 10-day moving average crossing are needed to signal that a low has been posted. If it extends last week's decline, September's low crossing is the next downside target. USD/JPY closed higher on Monday as it consolidates above the 75% retracement level of the 2008-2009- decline crossing. The high-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are turning neutral signalling that sideways trading is possible near-term. If it extends the rally off August's low, the 2008 high crossing is the next upside target. Closes below the 20-day moving average crossing are needed to confirm that a short-term top has been posted. GBP/USD close higher due to short covering on Monday but remains below the lower boundary of this summer's trading range crossing. The low-range close sets the stage for a steady to lower opening on Tuesday. Stochastics and the RSI are oversold but remain neutral signalling that sideways to lower prices are possible near-term. If it extends the decline off September's high, the 50% retracement level of this year's rally crossing is the next downside target. Closes above the 20-day moving average crossing would temper the near-term bearish outlook in the market. USD/CHF closed higher due to short covering on Monday and above the 10-day moving average crossing. The high-range close sets the stage for a steady to higher opening on Tuesday. Stochastics and the RSI are turning neutral hinting that sideways trading is possible near-term. Multiple closes above the 10-day moving average crossing would temper the near-term bearish outlook. If it extends the decline off September's high, September's low crossing is the next downside target. HY Markets | |
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PTTEP’s First Bid to Plug Australian Oil Leak Fails
By Ben Sharples
Oct. 6 (Bloomberg) -- PTT Exploration & Production Pcl, operator of the Montara well that’s spilling oil into the Timor Sea off Western Australia’s Kimberley coast, said its first attempt to plug the leak failed.
A fresh bid would likely be made Oct. 9 or Oct. 10, Lauren Tindale, a Perth-based spokeswoman for PTTEP Australasia, said by telephone today. The company aims to halt the flow by injecting heavy mud into the well.
Oil, gas and condensate started seeping into the Timor Sea from the well on Aug. 21. A light “sheen,” or coverage, has entered Indonesian waters and is about 120 kilometers (75 miles) from the coast, Tracey Jiggins, spokeswoman for the Australian Maritime Safety Authority, said Oct. 3.
The sheen extends to within 144 kilometers of Australia’s coastline, Jiggins said. The government department is coordinating the cleanup effort and PTTEP has said it will cover the cost.
To contact the reporter on this story: Ben Sharples in Melbourne at bsharples@bloomberg.net
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Holiday Retail Sales May Drop for Second Year, NRF Forecasts
By Allison Abell Schwartz
Oct. 6 (Bloomberg) -- U.S. holiday sales may decline for the second year as consumers stick to budgets and retailers cut prices to encourage spending, according to an industry group.
Sales for the last two months of the year will probably fall 1 percent to $437.6 billion from the same period in 2008, the National Retail Federation said today in a statement. That’s not as steep as last year’s decline of 3.4 percent, the first drop since the NRF started tracking holiday sales in 1995.
The highest U.S. unemployment in 26 years, stagnant wage growth and wavering consumer confidence will reduce spending, according to Washington-based NRF. Holiday shoppers will continue to flock to discount retailers and warehouse clubs as they shop on tighter budgets, according to Rosalind Wells, the federation’s chief economist.
“It’s going to be heavily promotional because consumers are very cautious,” Wells said yesterday in a telephone interview. “They’re going to wait until they get the best price that they can get on things.”
TJX Cos., the Framingham, Massachusetts-based owner of the T.J. Maxx and Marshalls clothing chains, and Menomonee, Wisconsin-based Kohl’s Corp., the fourth-largest U.S. department store chain, have reported sales gains over the past two months. Higher-priced retailers including New Albany, Ohio-based Abercrombie & Fitch Co. and New York-based Saks Inc. have reported steep declines.
The NRF forecast excludes sales at car dealers, gas stations and restaurants. The trade group forecast a 3 percent decline in retail sales for all of 2009.
Discounts may not be as deep as they were last holiday season because retailers have trimmed inventory to match the pace of consumer spending, Wells said.
‘Razor-Sharp’
“Retailers’ focus on the holiday season has been razor- sharp with companies cutting back as much as possible on operating costs in order to pass along aggressive savings and promotions to customers,” NRF President and CEO Tracy Mullin said in the statement.
Consumers may shop online more this holiday season to limit trips to the mall that can prompt unplanned purchases, Wells said in the interview. Shopping online helps consumers limit discretionary spending because it’s easier to stick to a planned purchase, she said.
A drop would mark the first back-to-back decline in holiday retail sales in four decades, according to Stamford, Connecticut-based Archstone Consulting, citing U.S. census data. Archstone forecast yesterday that holiday retail sales will fall 1 percent.
The U.S. unemployment rate rose to 9.8 percent in September, the highest since 1983, from 9.7 percent in August, the Labor Department said Oct. 2. Payrolls fell by 263,000, more than forecast in a Bloomberg survey of economists.
Confidence Falls
Confidence among U.S. consumers unexpectedly fell in September. The Conference Board’s confidence index dropped to 53.1, from a revised 54.5 in August. Consumer confidence was projected to increase to 57, according to the median estimate in a Bloomberg survey.
“Last holiday season, I think, most retailers were taken by surprise about how precipitous the drop was in retail sales,” Wells said. “Retailers have had almost a full year of pretty weak sales so they’ve started to adjust to that.”
To contact the reporter on this story: Allison Abell Schwartz in New York at aabell@bloomberg.net
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Fujii Says Weak-Currency Policies Aren’t Desirable
By Keiko Ujikane
Oct. 6 (Bloomberg) -- Japanese Finance Minister Hirohisa Fujii said he told Group of Seven officials that governments worldwide shouldn’t pursue policies that seek to devalue their currencies.
“I made the point that it’s undesirable for individual nations to take a weak-currency policy,” Fujii said at a news conference in Tokyo today. “Currency devaluation policies back in the 1930s had an adverse impact on the global economy and politics.”
Officials expressed “various opinions on the weakening of the dollar” at the G-7 meeting in Istanbul last weekend, he said, while declining to comment on foreign-exchange rates. The slide in the U.S. currency has sparked concern from Canada to France over the potential impact on economic recoveries.
Fujii indicated at the gathering that Japan is open to intervening in the currency market to stem gains in the yen, which rose to an eight-month high against the dollar last week. He said the government “will take action” should currencies “show excessive moves in a biased direction.”
Fujii also said today that he wasn’t aware of a newspaper report that Gulf states may start to move to a basket of currencies, rather than the dollar, for oil trading. When asked about the report, the minister said he “doesn’t know anything about it.”
Started Talks
Arab states have started talks with China, Russia, Japan and France to stop using the U.S. currency for settling oil transactions, the Independent newspaper reported, citing Middle Eastern and Chinese banking officials it didn’t name.
The dollar fell for a second day against the Japanese currency after the report, trading at 89.13 yen at 1:24 p.m. in Tokyo from 89.53 yen in New York yesterday.
Separately, Fujii said he hadn’t heard whether the Bank of Japan will this month consider deciding to let its programs of purchasing corporate debt expire at the end of the year.
The central bank “will judge what is appropriate for corporate funding,” he said, adding that he’s “confident” it won’t pursue actions that risk undermining the recovery.
Bank of Japan Governor Masaaki Shirakawa said on Oct. 3 that the need for the programs of buying commercial paper and corporate bonds has eased as companies regain access to funding in the markets. The central bank may decide as soon as this month to let the measures expire at the end of the year, people with direct knowledge of the discussions have said.
Fujii said that the central bank decides monetary policy in a way that complements the government’s economic goals.
To contact the reporter on this story: Keiko Ujikane in Tokyo at kujikane@bloomberg.net
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HSBC Raises Asia 2010 Growth Forecast to 7.6%
By Jason Clenfield
Oct. 6 (Bloomberg) -- HSBC Holdings Plc raised its 2010 economic growth forecast for Asia excluding Japan to 7.6 percent from 6.9 percent, led by faster expansions in China, South Korea and Singapore.
“Growth has roared back in Asia, with domestic demand firing on all cylinders and exports accelerating too,” the bank wrote in a report published today.
China will expand 9.5 percent, faster than an earlier forecast for 8.5 percent, HSBC said. Hong Kong’s growth estimate was raised to 3.8 percent from 2.4 percent. South Korea will grow 4.6 percent, versus the 3.6 percent estimated previously, and Singapore will expand 6.5 percent compared with 5.3 percent.
“Besides continued strength in consumption and investment, we expect exports to rebound over the coming quarter, driven by restocking in the West and inter-emerging markets trade,” HSBC economists Robert Prior-Wandesforde and Frederic Neumann wrote in the report.
They said the region’s central banks will begin to raise interest rates. Australia will increase its key rate later this year, and Korea and Taiwan will move in the first quarter of 2010. China, India, Indonesia, the Philippines, Vietnam and Thailand will following in the second quarter, the report said.
To contact the reporter on this story: Jason Clenfield in Tokyo at jclenfield@bloomberg.net
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Philippine Inflation Accelerates From Two-Decade Low
By Karl Lester M. Yap and Max Estayo
Oct. 6 (Bloomberg) -- Philippine inflation accelerated from a 22-year low last month, supporting the central bank’s decision to stop cutting interest rates as economic growth recovers.
Consumer prices rose 0.7 percent from a year earlier, after a 0.1 percent gain in August, the National Statistics Office said in Manila today. That compares with the median forecast for a 0.6 percent increase in a Bloomberg survey of 10 economists.
Bangko Sentral ng Pilipinas kept its benchmark interest rate unchanged at 4 percent last week for a second straight meeting after slashing it by 2 percentage points from December to July. Inflationary risks have increased since August as the economy picks up, Deputy Governor Diwa Guinigundo said Oct. 1.
“Headline inflation is starting to accelerate” and will rise sharply in the coming months, said Frederic Neumann, an economist at HSBC Holdings Plc in Hong Kong. “We expect the central bank to start preparing the ground for rate hikes early next year.”
The peso rose 0.4 percent to 46.53 per dollar as of 9:48 a.m. in Manila, its highest level since Jan. 7, according to Tullett Prebon Plc.
The Philippine economy expanded 1.5 percent in the second quarter from a year earlier, accelerating from a decade low as record-low borrowing costs and government stimulus helped Asian nations recover from the global recession.
‘Exit Strategy’
Bangko Sentral has “an exit strategy in place” and will “shift gradually to a different monetary stance” when it sees signs of firmer growth, Guinigundo said last week.
Fuel, electricity and water prices fell 3.4 percent from a year earlier last month, easing from a 5.4 percent decline in August. Food, beverage and tobacco costs climbed 2.2 percent.
Damage caused by tropical storms to crops and properties in the past two weeks may also fuel inflation, said Ildemarc Bautista, an economist at Metropolitan Bank & Trust Co.
“There is a potential for price increases as people purchase items to clean up and refurbish their houses,” said Bautista, who is based in Manila. “That’s a lot of people buying from the same hardware stores and groceries. It could cause a blip in inflation.”
Typhoon Parma, which hit the Philippines on Oct. 3, killed at least 16 people and brought more rain to areas still recovering from Tropical Storm Ketsana the week earlier. Ketsana dropped the most rain on Manila and nearby provinces in at least 40 years, leaving 293 dead.
To contact the reporter for this story: Karl Lester M. Yap in Manila at kyap5@bloomberg.net
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Obama Weighs Spending to Stem Job Cuts Without Second Stimulus
By Mike Dorning and Nicholas Johnston
Oct. 6 (Bloomberg) -- President Barack Obama is considering a mix of spending programs and tax cuts to respond to widening job losses that would amount to an additional economic stimulus without carrying that label.
The discussion of the initiatives, including a boost in transportation spending and an extension of an expiring tax credit for first-time homebuyers, comes as the White House is balancing rising concern about unemployment and a budget deficit the Congressional Budget Office estimates will total $1.6 trillion for 2009, and $1.4 trillion in 2010.
Administration officials have told allies in Congress that a broader transportation bill, and extensions of a homebuyer tax credit and unemployment benefits are all on the table, a Senate aide said.
Representative Chris Van Hollen of Maryland, who chairs the Democratic Congressional Campaign Committee that is tasked with holding the party’s House majority in next year’s midterm elections, said additional transportation funding would be popular among Democratic lawmakers.
“If there was to be another round of stimulus, additional infrastructure would be at the top of the list,” Van Hollen said in an interview. Money for roads, transit and bridges would be a priority.
Contradictory Missions
In considering the measures, the administration has to reconcile two potentially contradictory missions: combating rising unemployment through government intervention and the need to hold deficits down.
White House Press Secretary Robert Gibbs yesterday highlighted those political sensitivities, saying there “were no plans” for a second stimulus like the $787 billion package passed earlier this year. Instead, he said, the administration is looking at “extensions” of existing programs.
“The economic team is certainly looking at and working on any way that we can create more jobs,” Gibbs said.
The items under consideration include an increase in infrastructure spending through expiring transportation legislation that Congress must reauthorize in the coming months, the Senate aide said, speaking on condition of anonymity.
Other steps being weighed include an extension of a tax credit of up to $8,000 for first-time homebuyers that is due to expire later this year, and a renewal of a tax benefit for net operating losses that would benefit small businesses, the aide said.
‘A Stimulus’
“Clearly these things are a stimulus,” said Dean Baker, co-director of the Center for Economic and Policy Research in Washington, who has called for more stimulus spending. “There’s no two ways about it.”
The Obama administration isn’t near a final decision on additional measures, said Jen Psaki, a White House spokeswoman.
“As they continue to explore the best options, any notion that we are any farther along than preliminary discussions about new proposals is wildly inaccurate,” she said.
The Labor Department reported last week that unemployment reached 9.8 percent in September, the highest level since 1983. Nonfarm payrolls dropped by 263,000, a steeper drop than economic forecasters had expected.
At the same time, the federal deficit has risen sharply because of this year’s stimulus package and bailouts for the banking industry, auto industry and Fannie Mae and Freddie Mac. While the Obama administration has pledged that a health-care overhaul it is pushing through Congress won’t widen the deficit, it has stirred concerns among fiscal conservatives.
‘More Difficult’
“More of a stimulus package is much more difficult at this point than it was in February,” said Julian Zelizer, a professor of public affairs at Princeton University in New Jersey. “The deficit can become a political straitjacket to the Democrats.”
Obama and his aides have stressed that they expect employment growth to lag in an economic recovery. They now confront rising joblessness as they move toward midterm elections in November 2010.
Since 1945, the party that controls the White House has lost an average of 16 House seats in a president’s first midterm election, according to the Cook Political Report, a nonpartisan publication in Washington. The Democrats have 256 seats in the chamber, compared with 178 for the Republicans.
30-Day Extension
The federal transportation funding program, which provides routine federal aid for highway construction and other transportation projects, expired Sept. 30 and is operating under a 30-day extension passed by Congress.
While the transportation funding law typically is renewed in multiyear increments, the Obama administration has instead proposed an 18-month extension, a move backed by the Senate public works panel. That time frame limits the scope of the bill to the period in which economic forecasters expect high unemployment.
Representative James Oberstar, a Minnesota Democrat who chairs the House Transportation and Infrastructure Committee, has proposed a six-year $500 billion highway and transit bill. Most of the measure is financed through federal gasoline taxes, which haven’t been raised since 1993. At the current level, the tax would only generate about $350 billion over six years.
A six-year bill would be “a better stimulus than a temporary, one-time, infusion of cash,” said Jim Berard, a spokesman for Oberstar.
Van Hollen said Congress’ first step would likely be to move forward with an extension of unemployment benefits.
“We don’t want to get ahead ourselves here,” he said.
To contact the reporters on this story: Mike Dorning in Washington at mdorning@bloomberg.net; Nicholas Johnston in Washington at njohnston3@bloomberg.net.
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Hong Kong Luxury Home Deals Triple on Mainland Buyers
By Sophie Leung and Theresa Tang
Oct. 6 (Bloomberg) -- Hong Kong’s luxury home sales almost tripled in September from a month earlier, as mainland Chinese residents flocked to buy flats in the city.
The registered sales of residential units worth more than HK$10 million ($1.3 million) rose to 1,351 from 500 in August, according to Land Registry figures released yesterday. A one- bedroom flat in Kowloon sold for a record HK$24.5 million, Centaline Property Agency Ltd. said last month.
Luxury home prices in Hong Kong climbed as much as 28 percent in the first nine months of the year, as low mortgage costs fueled buying, according to Colliers International Ltd. Prices may rise by between 5 and 10 percent in the next 6 to 12 months, the global real-estate broker said last month.
“The luxury home market is very active,” Buggle Lau, chief analyst at Midland Holdings Ltd., said by phone today. “Capital from the mainland and overseas is contributing.”
There is “enormous liquidity and buying” from Chinese residents, Martin Cubbon, executive director of Swire Pacific Ltd., said Sept. 29.
The aggregate number of homes registered increased to 12,285 from 11,250 in August, the government said on its Web site.
“We probably will see consolidation after home prices, especially luxury apartments, jumped quite a bit, because the market thinks interest rates may have bottomed out,” Credit Suisse analyst Cusson Leung said in a telephone interview.
Mortgage Rates
Mortgage rates in Hong Kong are the lowest in at least 19 years as banks seek to offset slower demand for other types of credit.
Lenders have cut mortgage rates “to such an extent that they might not have given due regard to the reputation risk, interest rate risk and liquidity risk potentially associated with their pricing,” Hong Kong Monetary Authority Deputy Chief Executive Y.K. Choi said Sept. 17.
“Average mortgage rates are going to pick up gradually,” Peter Wong, head of the Hong Kong unit of HSBC Holdings Plc, said in the city last week.
New mortgage loans approved fell 8.2 percent in August from a month earlier to HK$34.2 billion, the HKMA said last month.
Hong Kong home prices may fall in coming months as Chinese investors face a slowdown in lending growth at home, reducing their buying power, said Leung at Credit Suisse. “Mainland investors’ appetite goes along with growth of liquidity in China, which has already showed signs of slowing down,” he said.
Loans in China
China’s banks extended 410.4 billion yuan ($60.1 billion) of local-currency loans in August, up from 355.9 billion yuan in July, according to official figures. New lending in September may fall to a range between 300 billion and 400 billion yuan, China Banking Regulatory Commission Chairman Liu Mingkang said yesterday.
A one-bedroom apartment at the Masterpiece development in Hong Kong’s Kowloon district was bought for HK$30,025 a square foot last month, a record for a property of that type in the city, Centaline said. The home, with space of 816 square feet (75 square meters) was sold for HK$24.5 million.
Hong Kong is the world’s fifth-most expensive residential real estate market, after Monte Carlo, Moscow, London and Tokyo, according to Global Property Guide.
To contact the reporter on this story: Sophie Leung in Hong Kong at sleung59@bloomberg.net
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Oil Trades Above $70 After Rising on Equity Gain, Dollar Drop
By Yee Kai Pin and Ben Sharples
Oct. 6 (Bloomberg) -- Crude oil traded above $70 a barrel in New York after rising on optimism fuel demand will increase amid improved prospects for a recovery in the U.S., the world’s biggest energy consumer.
Oil climbed to $71 yesterday as U.S. stocks gained after a report showed service industries returned to growth following 11 months of contraction. Commodities also rose as the dollar fell on a report Gulf states may switch to a basket of currencies to trade oil. The dollar’s decline bolstered the appeal of raw materials as a hedge against inflation.
“People are still on the backfoot wanting to buy and consume,” Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney, said in a Bloomberg Television interview. “The positive data we had out of the U.S. last night with the ISM non-manufacturing was another step to say that any dip really should be looked at.”
Crude oil for November delivery was at $70.55 a barrel, up 14 cents, in electronic trading on the New York Mercantile Exchange at 12:47 p.m. in Singapore. Yesterday, the contract gained 46 cents, or 0.7 percent, to settle at $70.41 a barrel. Prices have climbed 58 percent this year.
The Institute for Supply Management’s index of non- manufacturing businesses, which make up almost 90 percent of the U.S. economy, rose to 50.9, higher than forecast, from 48.4 in August, according to the Tempe, Arizona-based group. Fifty is the dividing line between expansion and contraction.
“The major headline supporting the rally was the September ISM non-manufacturing report showing positive growth,” Mike Sander, an investment adviser at Sander Capital in Seattle, said in a note. “Oil was pushed higher thanks to the 100-point move in the Dow Jones” Industrial Average, he said.
Asian Shares
Asian stocks rose for the first time in four days. The MSCI Asia Pacific Index added 1 percent to 114.89 as of 1:42 p.m. in Tokyo. Yesterday, the Standard & Poor’s 500 Index added 1.5 percent to 1,040.46 in New York, its steepest gain in a week. The Dow Jones Industrial Average advanced 112.08, or 1.2 percent, to 9,599.75.
The dollar fell to $1.4710 per euro at 12:38 p.m. in Tokyo, from $1.4648 yesterday in New York, after the U.K.-based Independent newspaper reported Arab states are seeking to move to a basket of currencies, including the yen, the yuan, the euro and gold to settle oil transactions. Commodities including gold and copper advanced.
“We’re seeing some tentative signs that consumption is picking back up,” said Ben Westmore, an energy and minerals economist at National Australia Bank Ltd. in Melbourne. “It continues to look like the recovery is on track.”
Oil Inventories
U.S. crude oil inventories probably rose last week as refineries performed seasonal maintenance, a Bloomberg News survey showed. Commercially held stockpiles increased 2 million barrels from 338.4 million in the week ended Oct. 2, according to the median of estimates from 11 analysts.
Distillate fuel inventories, which include heating oil and diesel, are expected to have declined 400,000 barrels, the survey showed. Stockpiles previous rose a sixth week to 171.1 million barrels, the highest since 1983.
The Energy Department is scheduled to release its Weekly Petroleum Status Report at 10:30 a.m. tomorrow in Washington. The industry-funded American Petroleum Institute will put out its own data today.
Brent crude oil for November settlement traded at $68.16 a barrel, up 12 cents, on the London-based ICE Futures Europe exchange at 12:46 p.m. Singapore time. Yesterday, the contract slipped 3 cents to settle at $68.04 a barrel.
To contact the reporters on this story: Yee Kai Pin in Singapore at kyee13@bloomberg.net; Ben Sharples in Melbourne at bsharples@bloomberg.net.
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