Archive for October, 2009

Dollar witnesses a two-week low

Friday, October 9th, 2009

The dollar witnessed a two-week low as compared to the euro as signs the international economy is improving increased demand for the high-yielding material goods. After the employment suddenly boosted in the month of September, the Australia dollar increased to a fourteen-month high.

Phil Burke who is the main dealer of the foreign-exchange, spot trading at JP Morgan Securities at Sydney said that according to the people the tough time is over and it does makes sense. But on the whole the dollar is still in a mid term downtrend. In Tokyo, the dollar decreased $1.4769 per euro at 11:49 a.m. from $1.4690 in New York. Previously, it reached $1.4773 which is the lowest since 24th September.

The euro didn’t changed at 130.17 yen, but the dollar came down from 88.60 yen to 88.21 yen. Yesterday it came down to as low as 88.01 which is the weakest in over eight months. The MSCI Pacific Index of the local shares increased 1.1 percent, and Nikkei 225 Stock Average of Japan added 0.1 percent. The gold also increased to the record high for the third consecutive day. The dollar turned down as the survey of the economists estimated the German industrial production extended 1.7 percent in the month of August following 0.8 percent downfall in the month of July.

Berlin’s Economy Ministry is all prepared to the pass the report today. In a different survey estimate, the production of the factory increased 2.1 percent in the month of August after 9.2 percent downfall in the month of July. The data will be revealed tomorrow in Tokyo. Adam Carr who is a senior economist at ICAP said that the international economy is bouncing back.

The European Central Bank will be holding their chief refinancing rate which is at a record low of one percent, and Bank of England is also keeping their chief rate very low at 0.5 percent. Both the central banks will be having a meeting today. According to the experts, the standard rate of the Federal Reserve will be increasing in the third quarter of 2010. The dollar of Australia increased 1.2 percent to the 90.23 American cents which is the maximum level since the month of August 2008 from yesterday’s 89.11 cents in New York.

According to the statistic agency in Sydney, the number of people employed increased to 40,599 from the previous month of August 2008. The unemployment rate also came down 5.6 percent from 5.7 percent. According to the Finance Ministry of Japan the country’s current-account surplus increased 10.3 percent to 1.170 trillion yen in the month of August from the previous year.

The dollar of New Zealand increased to 74.01 American cents from 73.63 yesterday. Previously it reached 74.20 cents which is the healthiest since the month of July 2008. The Finance Minister of New Zealand Bill English said that he is not at all happy with the currency’s level. The yen traded nearby the maximum level in more than eight months as compared to the dollar on the consideration of BOJ (Bank of Japan) will be faster as compared to the Federal Reserve in extracting the emergency stimulus actions.

On 3rd October, the Governor of Bank of Japan Masaaki Shirakawa said that there is a need for the programs to purchase commercial paper and other commercial bonds has relieved. William Dudley who is the President of New York Fed said that American rate of interest should remain low for quite some time just to make sure a healthy revival.

Hideki Amikura who is the deputy general manager of Nomura Trust & Banking Corp, Tokyo said that it is feasible that Bank of Japan might be faster as compared to Fred in making use of the exit policies. This could probably help in the purchase of the yen.

There will probably a draw back from S&P 500 with the weakening of the bank progress

Friday, October 9th, 2009

As per MKM Partners, different technology organizations and banks which surpassed Standard & Poor’s 500 Index with an increase after a twelve year low are all losing their pace. This put forward one fact i.e. that the market might draw back ten percent. Around 79 financial organizations in S&P 500 is beating the large index by one percentage point since 5th August, as the stocks of the technology is surpassing it by 0.6 point. Between 8th March and 4th Aug the estimate of the bank gathered 125 percent, the computer measure increased around sixty percent, and according to the data S&P 500 rose by around fifty percent.

Katie Stockton who is a main market technician at Greenwich, Connecticut-based MKM gave a statement in an interview that the loss of relative power is something which maintains a rectification. What usually take place on a comparative basis is most of the times an untimely sign of what could actually happen.

From the ten of the industry groups in S&P 500, the financial stocks and technology are the biggest. Financial shares led the jumping back of the index since the month of 9th March as credit markets melted and the major banks of America were of the view that they were lucrative to make a beginning of the year. Technology shares are the finest performing organizations which trade the products in developing markets in the areas which are outside America.

Drawing away of S&P 500 would stop prior to reaching 945, which is a ten percent fall from the yesterday’s closure. Ms. Katie said that the level is important because it is very much closer to the S&P 500’s intraday rise on 6th January which stayed on the top for the whole year until 1st June as the index came down around thirty percent.

Katie added that there are chances that drawing back could overlap with most of the stocks in S&P 500, coming down quite fast in relation to the latest trading range. More than thirty percent of S&P 500 organizations are oversold based on stochastics. The investors should hang around for the raise to around 54 percent prior to going back.

Katie said that following the rectification, S&P 500 will probably rally to a minimum 1,219 which is a sixteen percent rally from today’s closure. In the coming two weeks, fall is expected because in the previous month S&P 500 had technical analysts like Katie, who base all the forecasts on volume and price charts, term an unsuccessful breakout. The index closed over 1,053, a key confrontation level, on the month’s 3rd Friday, then failed to reach it to the top at the end of either of the subsequent Fridays.

Katie said that most of the unsuccessful breakouts are followed by the procedure of rectifications. Making a combination with the seasonality of October is quite weak and she thought that the market has set up to face rectifications for this month.

It was during the month of October when one of the major downfalls in America took place which comprises of crashes of both 1987 and 1929. Last October, the S&P 500 came down sixteen percent which is their worst month for the year 2008.

The euro-zone economy deal a little more than anticipated

Friday, October 9th, 2009

According to the official data in the second quarter, the euro-zone economy deal was a little higher than anticipated. According to Eurostate of European Union data, the GDP (gross domestic product) of around sixteen countries which are making use of euro came down by 0.2 percent between the month of April and June end, compared with the beginning three months of the year, and was 4.8 percent inferior than in the last year’s second quarter.

As per Dow Jones Newswires assessments by the economists in the previous week, the economists were not anticipating any revision of earlier estimation of second quarter GDP of 0.1 quarterly downfall and 4.7 percent fall on the year. According to the data it is still signifying a revival from the initial three months of the year when Gross Domestic Product came down 2.4 percent on the quarter and 4.8 percent on the year, but there are chances that this would temper some hopefulness regarding the revival.

Progressing trade studies of the consumer self-confidence have encouraged most of the economists that the euro zone will be making a come back to the quarterly development between the months of July and September. But there are some factors regarding how strong the revival will be with the joblessness at a ten year high and still increasing.

The GDP data will most probably support the anticipations that European Central Bank will be leaving their main rate of interest and other original policies calculations after their subsequent fiscal policy meeting which will be held on Thursday, and for the future, because of the inflation limitations.

According to the breakdown of the figures of gross domestic product, the final spending expenses was modified to demonstrate the increase of 0.1 percent on a quarterly basis in the second quarter, from the boost of 0.2 percent in the earlier approximation. In the first quarter household expenses came down by 0.4 percent. According to Eurostat, in the second quarter the investments cam down 1.4 percent. That was the descending modification from 1.2 percent fall which was reported in the earlier estimation. But still there was a significant development on 5.3 percent drop seen in the initial three months of the year.

According to the figures though the exports came down 1.4 percent on the quarterly basis in the second quarter, imports also came down 2.8 percent. In the first quarter, the exports also came down 9.1 percent and imports decreased 7.8 percent.

Chances of European Stocks to open small

Friday, October 9th, 2009

On Wednesday there are chances that European Stocks will be opening low, with little near-term merging of the fresh profits probably following an impressive performance in the earlier session. On Tuesday, the European indexes increased two percent more in spite of the calls opening inferior, especially in the vital resources field. Ben Potter who is a research analyst with IG Markets said that with the prices of gold all time high, the miners also had a strong position in Asia and this area can also be predicted to continue in favor of European business.

Ben said that FTSE 100 of London index came down by nine points at 5128.0 or 0.1 percent, CAC- 40 of Paris came down 0.2 percent or ten points at 3759.0, DAX of Frankfurt came down 21 or 0.3 percent at 5636.0. In addition to this the investors is also anticipating American third-quarter earning numbers, which started later Wednesday with reports submitted by Alcoa. In the meantime on Wednesday, majority of the stock markets of Asia were high. Resources stocks, energy, and gold were shining when the prices of spot gold reached a record high.

Kospi Composite of South Korea increased 0.2 percent, Nikkei 225 of Japan increased 1.1 percent, and Hang Seng of Hong Kong increased 19 percent. American stocks rallied largely for a second session on Tuesday as the investors appeared even more hopeful about the stat of the third-quarter profits season. The index ended up 1.3 percent at 9731.2. The Standard & Poor’s 500 raised 1.3 percent at 1054.6. The profits were lead by the energy corporations which were up by 2.1 percent and materials organizations increased by 1.9 percent and NASDAQ Composite increased at 2103.5.

As for the foreign exchanges, on Wednesday the dollar was mixed in the early hours of European trading. The euro on Tuesday slightly became normal to $1.4719 from $1.4721 in late New York trading. But the dollar came down to Y88.54 from Y88.82. In another place the prices of spot gold reached the record high at $1042 per troy ounce. The metal was at $1042.19 at 0625 GMT, $4.44 high from New York close.

In New York, the lead November Nymex crude oil futures agreement raised 53 cents at $71.41 per barrel, after finalizing 47 cents more on Tuesday. The government bonds of Europe were slightly less following the healthy movements in equities across the world. At 0625 GMT, the December German bund future came down 0.04 at 122.37.

Asian stock markets on a high

Friday, October 9th, 2009

On Wednesday, most of the Asian stock markets were high and it was supported by Wall Street’s rally. Resource stocks, energy, and gold were shining after the prices of the gold went up a record high as the prices of the oil and base metals increased on Tuesday. The investors were expectant about American third quarter income, which started on Wednesday with the reporting of Alcoa (aluminum giant). Bell Potter who is a Senior Client Adviser at Stuart Smith, Sydney said that there are only little negatives witnessed, with more hopefulness about profit margin growth and not essentially top line income impelling the market.

Nikkei 225 of Japan was up by 0.8 percent; Kospi Composite of South Korea was up by 0.2 percent, Hang Seng of Hong Kong was at 1.6 percent, and S&P/ASX 200 of Australia was by 1.5 percent. Dow Jones Industrial Average prospects were up by ten points in the screen trade after the closing of DJIA at 1.3 percent.

After the prices for the spot gold increased and touched a record high on Tuesday at $1043.54 per troy ounce, the gold miners were leading the way in Australia. The yellow metal was lately at $1038.29 per troy ounce which came down by $3.49 from the close of New York. Lihir Gold increased by 5.1 percent and Newcrest Mining rushed 6.3 percent. On Tuesday, the profits earned by base metals price assisted BHP Billiton up 2.6 percent and Rio Tinto increased by 4.2 percent as the increase in the crude oil prospects helped Wood side Petroleum by 0.3 percent and Santos by 1.0 percent.

The lead November Nymex crude oil prospects agreement was lately increased 42 cents at $71.29 per barrel, settling at 46 cents more in New York on Tuesday. Energy stocks and miners too surpassed in the Asian markets. Mitsubishi Materials was up 6.5 percent, Sumitomo Metal Mining in Japan was up 5.2 percent, and in Korea Korea Zinc rushed 6.8 percent and Posco increased 1.6 percent.

In Hong Kong Chalco were up 2.6 percent, Shenhua 2.1 percent and Cnooc up by 1.2 percent. Ben Kwong of KGI was of the view that better market feeling will probably lend some assistance for the local market, but possible policy dangers in China further on restrain any more increase in the coming term. The shares of Japan were also joining, though a market analyst with Daiwa Securities SMBC said that yen being stronger than American dollar is a big worry. It will not happen like that the investors will be sell exporters aggressively, but they will be quite careful regarding investing with them.

Tosoh who is a main material maker from Japan is amongst the big gainers was up 5.8 percent and peer Showa Denko increased 8.7 percent when Nikkei reported that both of them were starting to manufacture safe, inexpensive materials for lithium ion batteries for increasing the green vehicles demand. NZX-50 of New Zealand came down 0.4 percent, main index of Malaysia was up 0.3 percent, and Straits Time Index of Singapore was up 1.1 percent. Main index of Indonesia was up 0.3 percent, main index of Taiwan increased 0.6 percent, and Philippines shares increased 2.3 percent. The markets of China were closed because of their National Day holidays.

The land-assets, construction stocks, and banks were having an increase from the weak American dollar with Cathay Financial increase 4.3 percent and Fubon Financial yup 1.7 percent. Randy Chang of KGI Securities said that the profits are because of the liquidity momentum while the Asian currencies profits against American dollar. The market of New Zealand undid their previous profits as the strong Telecom Corp. came down 2.2 percent and Fletcher Building lost 2.2 percent. The broker of David Price said that the fault of these two stocks were because of the index alterations from foreign parties.

The American dollar was up against the yen in the foreign exchange market after the Tuesday’s heavy losses and was trading at Y88.87 in late New York business. The euro was recorded at $1.4697 from $1.4723 and from Y130.65 at Y130.66. On Tuesday the market of base metals was getting the flow back after the impressive profits. Mark Pervan who is a Senior Commodity Strategist at ANZ said that the base metals are following the dollar. Copper is still maintaining is importance but aluminum is looking shaky.

British pound registered a major rise

Friday, October 9th, 2009

Following the jump in Britain’s home cost, the British pound witnessed an intraday rise of 1.6050. The currency was not able to stabilize as the industrial production all at once fell in the month of August. From the preceding day, the GBP/USD remained the same. The Halifax home prize index rushed 1.6 percent after increasing 0.8 percent in the month of August to surpass the anticipations for the increase of 0.6 percent. While the annualized rate came down 7.4 percent during the three months through the month of September amid prediction of 7.8 percent downfall.

Simultaneously, according to a different report the production all of a sudden plunged 2.5 percent in the month of August after increasing 0.5 percent in the preceding month along with the annual rate of manufacturing dropping 11.3 percent from the preceding year, while the production came down 1.9 percent from the month of July.

With the economic viewpoint remaining in doubt, the slew of mixed data proposes the BoE will maintain a peaceful attitude for the policies of future as the policy makers maintaining the risk for the slow revival. And there are chances for the pound to stay down as the investors scale back anticipations for high rates of interest in the subsequent year.

The euro increased against to greenback continuously for the 3rd day and crossed back over twenty day moving average to reach at 1.4752. In the meantime the council member of ECB Erkki Liikanen said that the central bank will take back their emergency programs when the economic circumstances permits, while Miguel Fernandez Ordonez disagreed preventing the incentive too soon might affect the economic recovery as the chances of uncertainties are major.

In addition to this, Miguel anticipated slow paced revival and expects the price pressure to rise by the year end, but the council member had a peaceful attitude for the upcoming price rise as he anticipates price rise to stay reasonable for quite some time. The central bank is also probably to uphold their ongoing policy on Thursday in order to encourage a sustainable revival.

The American dollar destabilized after The Independent newspaper made a comment that Persian Gulf were in talks with China and Japan in order to move oil price to a bank of assets. This would comprise the Japanese yen and euro while the Australian dollar increased to 0.8885 with the Reserve Bank of Australia shocked the market with a 25bp rake hike at 3.25 percent.

With healthy American gains European Stocks are predicted to open high

Friday, October 9th, 2009

With the healthy session in America which ended up with a triple digit profit to the Dow Jones Industrial Average, European stocks are anticipated to open high on Tuesday. According to James Hughes who is a market analyst at CMC markets, yesterday’s strong session in Europe was followed by some profits in both Asia and America as the traders started to feel optimistic.

James called FTSE of London 100 index up by 13 points, or 0.2 percent, at 5037.1, DAX of Frankfurt up 19, or 0.3 percent at 5527.8 and Paris’ CAC-40 up by fifteen points or 0.2 percent at 3690. Societe Generale will be center of attention after they have declared a capital increase of EUR4.8 billion in Europe. In addition to this, the European banking sector will be probably getting a lift after BoFA-Merrill Lynch improved the sector to overweight. Moreover the Tesco’s first half results will also be center of attention.

Earlier the equity markets of Asia most of them advanced Tuesday, encouraged by the solid gains for American stocks, although most of the markets came down or were making less profits.

The Nikkei 225 stock average became negative in Tokyo, as the continued power of yen in Japan increased the earnings distress for the exporters of the country. The increase in Asia was not able to match the extent of Dow Jones Industrial Average’s 1.2 percent gain on Monday. Yumi Nishimura at Daiwa Securities SMBC said that Wall Street’s rally didn’t signify that rectification in America stocks are over. Nikkei of Japan was 0.2 percent inferior after morning’s 0.7 percent. Kospi Composit of Korea too came down and was at 0.5 percent and Hang Seng Index of Hong Kong added 0.6 percent.

S&P/ASX 200 of Australia was higher by 0.5 percent even though the index came down a little after Australia’s Reserve Bank increased their key cash rate by 24 basis points at 3.24 percent. They became the first bank from the twenty nations in order to start financial tightening. For the session DJIA increased 1.2 percent to 959.7 which broke four day continuous losing.

On major banks, Goldman Sachs increased their rating to attractive Monday morning. Tough balance sheets, big assets, and better earnings, following the year’s worth of acquisition

Amongst other indexes Standard & Poor 500 increased 1.4 percent to 1040.4 and Nasdaq Composite raised 1.0 percent at 2068.1. As for the foreign exchanges, the dollar came down against yen and euro as risk hunger augmented. The participants of the market also noted the reports that every Gulf country is making plans to stop the usage of the dollar for the oil dealing. The euro was trading at $1.4734 which increased from $1.4647 on Monday. The dollar was projected at Y89.03 which decreased from 89.55.

Asian bonuses are little depressing

Friday, October 9th, 2009

Fischer of Fed has said that they are prepared with their exit plans but they are also not denying that deflationary pressure remains the key matter. The trading scarcity of Australia for the month of August is more than actually predicted i.e. at A$-1522 Mln and it was predicted at A$-848 Mln. UK Independent says that Arabian states have started undisclosed moves with countries like Russia, France, China, and Japan to discontinue use of USD for the trade of the oil.

With this story it has placed a trend for USD sale across Asia. The motor vehicle sales of Australia have increased by 4.8 percent. Fuji of Japan has said that BOJ should think about the economic viewpoint prior to coming to a decision whether rto should stop their December’s corporate debt buying.

The market is surprised with the sudden increase of rate of interest by 25bps by RBA. The Asian Bourses is a little down, the gold has increased at 1018.00, and oil flat has increased by $70.44. With the article of UK Independent, it has made USD to drop along with RBA increasing the rates by 24 bps witnessed USD and USD depreciating against other currencies. USDJPY came down from NY close to assess the bids at 88.00, plunging down without any follow through on the believed stops.

Additional bids are believed to be spread out back to 88.18. EURSD did a towering trading; more in one way, along with fewer pullbacks which is approximately 1.4698 after the news of American Dollar became public. It finally tested the double top at 1.4719 riding the AUDUSD boom after the declaration of rate rise. The major threat today was the decision regarding the rate by RBA. The decision was not at all expected by the market and it has left everyone surprised.

By the morning release of the worse, the AUDUSD didn’t get influenced than probable business shortfall number, but it increased from 8764 to 8844 with the declaration of 25 rbs rate increase by RBA. According to RBA, the economic situation of Australia is better than predicted and the confidence level is back and have cautioned about the rate increase in the coming days.

China and other fiscally strong countries advised to carry out their individual monetary policies

Friday, October 9th, 2009

A policymaker from European Central Bank said that the fiscally strong countries along with China should carry out their personal policies regarding financial matters instead of keeping the currencies peg to American dollar. Executive Board member of ECB, Lorenzo Bini Smaghi at International Monetary Fund and World Bank meetings in Istanbul said that to make progress China should take on their own fiscal policies and detach them Fed’s policy.

Lorenzo added that fiscally strong countries should adopt their own strategies and de-peg themselves from the dollar. Tracking the dollar makes it difficult for the policymakers to evade tracking rate of interest moves by American Federal Reserve. The comments made by Lorenzo struck with Governing Council member of ECB, Alex Webber, who said by economic policy interferences the foreign exchange rates of certain countries were falsely even out.

Talking about the involvement of China, Lorenzo added that they should talk to several Asian countries on this matter. There are still many countries those who have healthy peg to the dollar and correspondingly low rate of interest currently. With the purchasing of the currencies, monetary policy is more liberal there as compared to what the situation actually allows. He also added that they will witness the rates of foreign exchange becoming more flexible in the near future.

Time and again China has declared that they are still in the process of improving their rate of exchange system which allows the yuan act more flexibly. But this will not permit the moves which could weaken their economy. Practically since the month of July 2008, the central bank of China has kept the yuan flat against America with the deterioration of the global economy.

During the global economic slump, that policy didn’t face too many condemnations as China seemed to offer stability to the markets across the world. But with the global economy getting better China has started to collect more pressure from the public to let their currency get appreciated, as a method of cutting their big trade surplus and rectifying their worldwide unevenness.

Lorenzo also added that there are still many countries which haven’t admitted the involvement of markets from different parts of the world and are making an effort to develop by making use of the future resources. He said that probably several parts of the developed world have to grow less in order to let other parts to grow at a faster pace. Some elements of the developed world have recognized that they need to develop less but there are still some parts which have not realized that they are making efforts to develop by borrowing on the future.

Lorenzo added that the central banks should give more attention towards the money and credit development at the time of setting the rate of interests in order to keep away from the formation of the asset issues.