Tuesday, October 2, 2007
Euro Weakens Against Dollar
(RTTNews) - After moving slightly higher against the US dollar, the European currency lost ground by about 8:55 pm ET, in the early Asian deals on Tuesday. Falling from 1.4243, the pair hit a low of 1.4202 by about 2:15 am ET. Downside, 1.4191 is seen as the next target level for the pair. Investors now await Euro-Zone PPI and the unemployment rate data for August, which are expected shortly. The US Pending Home sales data for the month of August is also expected later in the morning.
Forex - Dollar gains vs euro after policymakers voice concern over euro strength
Tue, Oct 2 2007, 06:44 GMT
http://www.afxnews.com
HONG KONG (Thomson Financial) - The US dollar recovered against the euro in Asia midsession after European policy makers aired concerns about the pace of the single currency's appreciation.
European Central Bank President Jean-Claude Trichet and Luxembourg Prime Minister Jean-Claude Juncker both expressed some apprehension about the dollar's weakness, which would make European products exported to the US more expensive.
"The European officials don't want the US dollar to fall too quickly against the euro," said Mark Wan, vice president for treasury at DBS Bank in Hong Kong. "That's the reason behind the weakening of the euro. They want to slow down the appreciation of the euro."
At 1:00 pm, the euro was trading at 1.4217 dollars from 1.4236 this morning in Sydney. The euro hit all-time high record of 1.4283 dollars in Asian trade on Monday.
The dollar was quoted at 115.42 yen, down from 115.74 this morning and 115.80 in late New York trading overnight.
A decline in European exports to the US may slow growth in the euro zone, and this could prompt European policymakers to hold off hiking benchmark interest rates in the euro zone, reducing the lure of euro-denominated assets.
On the other hand, signs that the subprime mortgage crisis is subsiding and that fallout in the US economy has been contained may stay the Fed's hand from further rate cuts after this month, and that would increase investor appetite for dollar-denominated securities.
"The market is closely watching economic data releases in the US, particularly the payroll figures for September," Wan said.
If the September payroll report showed that jobless claims are improving, then "that could change the whole interest rate picture in the US," Wan said.
Jobless claims in the US unexpectedly fell in the week ending Sept 12, the second week of a decline in unemployment claims.
Wan expects the Fed to follow its bold half-a-percent rate cut on September 18 by another quarter-point cut by end of the month. That may be the last rate reduction for this year should the economy show signs of a recovery, he said.
Still, Wan is keeping his forecast that the euro may hit an all-time high of 1.44 dollars by yearend, while the yen will likely stick to the 114-117 range against the dollar.
"We have to wait and see if Japan can sustain its record-high exports to Europe and Asia in September, a sign that it has reduced its dependence on the US market," he said.
If this happens, then the yen may appreciate to the 110 per dollar level or even higher than that, he added.
In August, Japan's exports grew at an annual 14.5 percent, as sales to Europe and Asia soared while sales to the US inched up. Japan's trade surplus nearly quadrupled to 743.2 billion yen during the period.
John Noonan, analyst at Thomson IFR, said the recovery from extreme market turbulence seen in August due to the housing loan market crisis is now complete, with the Dow Jones Industrial Average at record highs and yen-funded carry trades nearly back at the levels they were in before the market turmoil began.
Carry trades refer to the practice of borrowing in low-yielding currency such as the yen to invest in high-yielding currencies elsewhere.
Noonan said the growing view that the worst might be over for the US economy could bring on a broad US dollar correction and send the euro lower, which would be a relief for euro zone officials worried that the euro was becoming too strong.
http://www.afxnews.com
HONG KONG (Thomson Financial) - The US dollar recovered against the euro in Asia midsession after European policy makers aired concerns about the pace of the single currency's appreciation.
European Central Bank President Jean-Claude Trichet and Luxembourg Prime Minister Jean-Claude Juncker both expressed some apprehension about the dollar's weakness, which would make European products exported to the US more expensive.
"The European officials don't want the US dollar to fall too quickly against the euro," said Mark Wan, vice president for treasury at DBS Bank in Hong Kong. "That's the reason behind the weakening of the euro. They want to slow down the appreciation of the euro."
At 1:00 pm, the euro was trading at 1.4217 dollars from 1.4236 this morning in Sydney. The euro hit all-time high record of 1.4283 dollars in Asian trade on Monday.
The dollar was quoted at 115.42 yen, down from 115.74 this morning and 115.80 in late New York trading overnight.
A decline in European exports to the US may slow growth in the euro zone, and this could prompt European policymakers to hold off hiking benchmark interest rates in the euro zone, reducing the lure of euro-denominated assets.
On the other hand, signs that the subprime mortgage crisis is subsiding and that fallout in the US economy has been contained may stay the Fed's hand from further rate cuts after this month, and that would increase investor appetite for dollar-denominated securities.
"The market is closely watching economic data releases in the US, particularly the payroll figures for September," Wan said.
If the September payroll report showed that jobless claims are improving, then "that could change the whole interest rate picture in the US," Wan said.
Jobless claims in the US unexpectedly fell in the week ending Sept 12, the second week of a decline in unemployment claims.
Wan expects the Fed to follow its bold half-a-percent rate cut on September 18 by another quarter-point cut by end of the month. That may be the last rate reduction for this year should the economy show signs of a recovery, he said.
Still, Wan is keeping his forecast that the euro may hit an all-time high of 1.44 dollars by yearend, while the yen will likely stick to the 114-117 range against the dollar.
"We have to wait and see if Japan can sustain its record-high exports to Europe and Asia in September, a sign that it has reduced its dependence on the US market," he said.
If this happens, then the yen may appreciate to the 110 per dollar level or even higher than that, he added.
In August, Japan's exports grew at an annual 14.5 percent, as sales to Europe and Asia soared while sales to the US inched up. Japan's trade surplus nearly quadrupled to 743.2 billion yen during the period.
John Noonan, analyst at Thomson IFR, said the recovery from extreme market turbulence seen in August due to the housing loan market crisis is now complete, with the Dow Jones Industrial Average at record highs and yen-funded carry trades nearly back at the levels they were in before the market turmoil began.
Carry trades refer to the practice of borrowing in low-yielding currency such as the yen to invest in high-yielding currencies elsewhere.
Noonan said the growing view that the worst might be over for the US economy could bring on a broad US dollar correction and send the euro lower, which would be a relief for euro zone officials worried that the euro was becoming too strong.
Monday, October 1, 2007
Euro Trending Down Against Yen
(RTTNews) - The European currency lost ground against the Japanese yen by about 6:55 pm ET in the early Asian deals on Tuesday. Down from 164.93, the pair hit a low of 163.75 by about 2:35 am ET. If the pair weakens further, 162.44 can probably be the next level of target. Early Asian deals were likely to have been affected by the Bank of Japan's monetary report released at 7:50 pm ET. The market now turns toward the Euro-Zone PPI and unemployment rate data for August, which are expected shortly.
BOJ Sees October Money Market Has Y2.87T Shortage
Tue, Oct 2 2007, 00:03 GMT
http://www.djnewswires.com/eu
BOJ Sees October Money Market Has Y2.87T Shortage
TOKYO (Dow Jones)--Japan's money market faces a deficit of Y2.87 trillion in October, compared with the Y3.396 trillion shortage in October last year, according to forecast by the Bank of Japan released Tuesday.
The details of the forecast are as follows:
Oct. 2007 Oct. 2006 Change
Total -2,870.0 -3,396.0 526.0
Banknotes -300.0 -308.1 8.1
Treasury funds and others -2,570.0 -3,087.9 517.9
Net JGBs and TBs -8,350.0 -10,128.2 1,778.2
Net FBs -1,060.0 -1,136.8 76.8
Other items 6,840.0 8,177.1 -1,337.1
Figures are in billions of yen. Negative figures represent a shortage of funds.
Net values show the difference between issuance and redemption of government bonds and treasury bills or financing bills.
http://www.djnewswires.com/eu
BOJ Sees October Money Market Has Y2.87T Shortage
TOKYO (Dow Jones)--Japan's money market faces a deficit of Y2.87 trillion in October, compared with the Y3.396 trillion shortage in October last year, according to forecast by the Bank of Japan released Tuesday.
The details of the forecast are as follows:
Oct. 2007 Oct. 2006 Change
Total -2,870.0 -3,396.0 526.0
Banknotes -300.0 -308.1 8.1
Treasury funds and others -2,570.0 -3,087.9 517.9
Net JGBs and TBs -8,350.0 -10,128.2 1,778.2
Net FBs -1,060.0 -1,136.8 76.8
Other items 6,840.0 8,177.1 -1,337.1
Figures are in billions of yen. Negative figures represent a shortage of funds.
Net values show the difference between issuance and redemption of government bonds and treasury bills or financing bills.
Yen May Extend Drop Versus Euro as Stocks Fuel Risk Appetite
Oct. 2 (Bloomberg) -- The yen may fall for a sixth day versus the euro, its longest slide since January, as rallying stocks encourage carry-trade investors to borrow in Japan to buy higher-yielding assets elsewhere.
Since the Federal Reserve cut its benchmark overnight rate on Sept. 18, Japan's currency has lost 4.9 percent versus the New Zealand dollar and 4.4 percent against the Australian dollar, both beneficiaries of the carry trade. The Dow Jones Industrial Average rose to a record yesterday as investors speculated the global economy will continue to expand.
``Risk appetite is obviously coming back to the market,'' said Michael Malpede, a senior currency analyst in Chicago at Man Global Research. ``The stabilization in the global stock market provided a shot in the arm for carry trades.''
The yen traded at 164.64 per euro at 5:39 a.m. in Tokyo, near the weakest since Aug. 9, after falling 0.5 percent yesterday. Japan's currency traded at 115.69 per dollar after decreasing 0.8 percent.
The yen has fallen 1.5 percent versus the euro since Sept. 18, when the Fed reduced its key rate 0.5 percentage point to 4.75 percent. Japan's rate of 0.5 percent is the lowest among major economies and compares with 8.25 percent in New Zealand and 6.5 percent in Australia.
The Dow Jones Average rallied yesterday as investors speculated the worst of the subprime fallout may be over. The Morgan Stanley Capital International Asia-Pacific Index reached an all-time high.
Economic Outlook
The economy of the 13 countries that use the euro will expand 2.6 percent in 2007 compared with Japan's 1.8 percent, according to Deutsche Bank AG. The U.S. economy will grow 1.9 percent this year and 2.2 percent in 2008 as rate cuts help the economy weather the housing slump, the bank forecasts.
Lehman Brothers Holdings Inc. said yesterday an in-house measure showed yen carry trades have increased at an ``impressive'' rate, helped by the Fed's half-point cut.
The firm said in a note to clients yesterday its yen carry- unwind signal has fallen to 19 percent from 95 percent in early August, showing investment in the strategy has increased.
The implied volatility of a one-month euro-yen option was 10 percent yesterday, down from 17.5 percent on Aug. 16. A decline in volatility encourages investors to borrow in Japan and buy assets overseas where yields are higher.
The National Association of Realtors is forecast to report today that the number of Americans entering into contracts to buy previously owned homes fell 2.1 percent in August, according to the median estimate of 30 economists surveyed by Bloomberg. Pending home sales fell 12.2 percent in July, the most since records began in 2001.
The Turkish lira, the biggest gainer among emerging-market currencies versus the yen this year, rose 1.3 percent against the currency yesterday. Turkey's benchmark rate is 17.25 percent.
``The carry trade is fairly well established and the conditions for the trade remain in place,'' said Win Thin, a currency strategist in New York at Brown Brothers Harriman & Co.
Since the Federal Reserve cut its benchmark overnight rate on Sept. 18, Japan's currency has lost 4.9 percent versus the New Zealand dollar and 4.4 percent against the Australian dollar, both beneficiaries of the carry trade. The Dow Jones Industrial Average rose to a record yesterday as investors speculated the global economy will continue to expand.
``Risk appetite is obviously coming back to the market,'' said Michael Malpede, a senior currency analyst in Chicago at Man Global Research. ``The stabilization in the global stock market provided a shot in the arm for carry trades.''
The yen traded at 164.64 per euro at 5:39 a.m. in Tokyo, near the weakest since Aug. 9, after falling 0.5 percent yesterday. Japan's currency traded at 115.69 per dollar after decreasing 0.8 percent.
The yen has fallen 1.5 percent versus the euro since Sept. 18, when the Fed reduced its key rate 0.5 percentage point to 4.75 percent. Japan's rate of 0.5 percent is the lowest among major economies and compares with 8.25 percent in New Zealand and 6.5 percent in Australia.
The Dow Jones Average rallied yesterday as investors speculated the worst of the subprime fallout may be over. The Morgan Stanley Capital International Asia-Pacific Index reached an all-time high.
Economic Outlook
The economy of the 13 countries that use the euro will expand 2.6 percent in 2007 compared with Japan's 1.8 percent, according to Deutsche Bank AG. The U.S. economy will grow 1.9 percent this year and 2.2 percent in 2008 as rate cuts help the economy weather the housing slump, the bank forecasts.
Lehman Brothers Holdings Inc. said yesterday an in-house measure showed yen carry trades have increased at an ``impressive'' rate, helped by the Fed's half-point cut.
The firm said in a note to clients yesterday its yen carry- unwind signal has fallen to 19 percent from 95 percent in early August, showing investment in the strategy has increased.
The implied volatility of a one-month euro-yen option was 10 percent yesterday, down from 17.5 percent on Aug. 16. A decline in volatility encourages investors to borrow in Japan and buy assets overseas where yields are higher.
The National Association of Realtors is forecast to report today that the number of Americans entering into contracts to buy previously owned homes fell 2.1 percent in August, according to the median estimate of 30 economists surveyed by Bloomberg. Pending home sales fell 12.2 percent in July, the most since records began in 2001.
The Turkish lira, the biggest gainer among emerging-market currencies versus the yen this year, rose 1.3 percent against the currency yesterday. Turkey's benchmark rate is 17.25 percent.
``The carry trade is fairly well established and the conditions for the trade remain in place,'' said Win Thin, a currency strategist in New York at Brown Brothers Harriman & Co.
EUR/USD: Euro enters in overbought zone
Mon, Oct 1 2007, 09:26 GMT
http://www.fxstreet.com
FXstreet.com (Barcelona) – The Euro’ upward trend has been renewed after September’s correction; Ted Wilson, technical analysts of iForex affirms: “Last week the EUR/USD sharply rose and overcame the resistance level 1.4205 and the psychological level 1.4250, after which it reached new historical level 1.4271.” About the daily trend, Wilson adds: “On a daily time frame the upwards trend accelerated but the Euro gets into overbought zone. Rising above 1.4282 may provoke further upward movement to the upper limit 1.4302. Going under 1.4195 may give signal for correction of the currency couple.”
http://www.fxstreet.com
FXstreet.com (Barcelona) – The Euro’ upward trend has been renewed after September’s correction; Ted Wilson, technical analysts of iForex affirms: “Last week the EUR/USD sharply rose and overcame the resistance level 1.4205 and the psychological level 1.4250, after which it reached new historical level 1.4271.” About the daily trend, Wilson adds: “On a daily time frame the upwards trend accelerated but the Euro gets into overbought zone. Rising above 1.4282 may provoke further upward movement to the upper limit 1.4302. Going under 1.4195 may give signal for correction of the currency couple.”
Australian dollar surges as demand for greenback falls
October 02, 2007 07:22am
THE dollar has opened firmly above 89 US cents for the first time since 1989, and continues to test historical highs as demand for the US dollar falls.
At 7am AEST, the Australian dollar was trading at $US0.8942/45, up from yesterday's close of 0.8918/24.
Overnight, it traded between a low of $US0.8854 and a high of 0.8950 - equalling the level last traded on February 10, 1989.
Bank of New Zealand currency strategist Danica Hampton said the Australian dollar had more potential to rise, but would likely meet with some resistance at about $US0.8960.
She said it would be well bought on dips of $US0.8920.
Ms Hampton said the Australian dollar rose overnight on support from the carry trades as investor sentiment and risk appetite grew due to a strong rise in US stocks.
The Dow Jones industrial average finished up 191.92 points, or 1.38 per cent, 14,087.55 after surging to an all-time high of 14,115.51.
The Standard & Poor's 500 Index gained 20.29 points, or 1.33 per cent, to end at 1547.04.
The Australian dollar has attracted support because of its high yielding interest rate, with the differential between US and local rates expected to increase, further boosting the currency.
But while sentiment remains overwhelmingly in the Australian dollar's favour, US sub-prime concerns caused a brief sell-off in the Australian dollar overnight.
"We heard some negative news from UBS and Citigroup, and that caused a little bit of a carry trade liquidation, but the losses were short lived," Ms Hampton said.
US bank Citigroup said overnight its fourth quarter profit will drop by about 60 per cent because of $5.9 billion in losses and write-downs as a result of sub-prime and leveraged loans.
Meanwhile, UBS said it would write down the value of its assets by $US3.4 billion because of losses in sub-prime mortgages.
"The US equity market shrugged them off and finished really strongly, so renewed the appetite for carry trades," Ms Hampton said.
"And so we saw a lot of momentum buying and a solid demand for Aussie/yen helped support the Aussie."
Also overnight, the US Institute of Supply Management's (ISM) performance of manufacturing index (PMI) index for September was
slightly weaker than expected at 52 points compared with expectations of a 52.6 reading.
However, the result remained above the critical 50 level, which separates expansion from contraction, with economic activity in the sector growing for the eighth straight month.
There is no first tier local data due today to guide the market.
The board of the Reserve Bank of Australia (RBA) meets today, however, and will announce its interest rate decision tomorrow.
Interest rates are expected to remain at 6.50 per cent, but some economists are tipping another rate rise by early next year
THE dollar has opened firmly above 89 US cents for the first time since 1989, and continues to test historical highs as demand for the US dollar falls.
At 7am AEST, the Australian dollar was trading at $US0.8942/45, up from yesterday's close of 0.8918/24.
Overnight, it traded between a low of $US0.8854 and a high of 0.8950 - equalling the level last traded on February 10, 1989.
Bank of New Zealand currency strategist Danica Hampton said the Australian dollar had more potential to rise, but would likely meet with some resistance at about $US0.8960.
She said it would be well bought on dips of $US0.8920.
Ms Hampton said the Australian dollar rose overnight on support from the carry trades as investor sentiment and risk appetite grew due to a strong rise in US stocks.
The Dow Jones industrial average finished up 191.92 points, or 1.38 per cent, 14,087.55 after surging to an all-time high of 14,115.51.
The Standard & Poor's 500 Index gained 20.29 points, or 1.33 per cent, to end at 1547.04.
The Australian dollar has attracted support because of its high yielding interest rate, with the differential between US and local rates expected to increase, further boosting the currency.
But while sentiment remains overwhelmingly in the Australian dollar's favour, US sub-prime concerns caused a brief sell-off in the Australian dollar overnight.
"We heard some negative news from UBS and Citigroup, and that caused a little bit of a carry trade liquidation, but the losses were short lived," Ms Hampton said.
US bank Citigroup said overnight its fourth quarter profit will drop by about 60 per cent because of $5.9 billion in losses and write-downs as a result of sub-prime and leveraged loans.
Meanwhile, UBS said it would write down the value of its assets by $US3.4 billion because of losses in sub-prime mortgages.
"The US equity market shrugged them off and finished really strongly, so renewed the appetite for carry trades," Ms Hampton said.
"And so we saw a lot of momentum buying and a solid demand for Aussie/yen helped support the Aussie."
Also overnight, the US Institute of Supply Management's (ISM) performance of manufacturing index (PMI) index for September was
slightly weaker than expected at 52 points compared with expectations of a 52.6 reading.
However, the result remained above the critical 50 level, which separates expansion from contraction, with economic activity in the sector growing for the eighth straight month.
There is no first tier local data due today to guide the market.
The board of the Reserve Bank of Australia (RBA) meets today, however, and will announce its interest rate decision tomorrow.
Interest rates are expected to remain at 6.50 per cent, but some economists are tipping another rate rise by early next year
Tokyo stocks likely to gain on Dow and soft yen
TOKYO, Oct 2 (Reuters) - Japan's Nikkei stock average is likely to open higher on Tuesday and may rise above the psychologically key 17,000 as investor snap up exporters such as Sony Corp (6758.T: Quote, NEWS , Research) following a jump on Wall Street and a fall in the yen.
KDDI Corp (9433.T: Quote, NEWS , Research) will be a focal point after the Nikkei business daily said the mobile phone operator plans to introduce a new fee system in November that cuts call charges by roughly 30 percent but raises handset prices in turn. KDDI rival NTT DoCoMo (9437.T: Quote, NEWS , Research) is expected to follow suit, the newspaper said.
Another stock in the spotlight is Matsushita Electric Industrial Co (6752.T: Quote, NEWS , Research) after the Nikkei said it sold all 17 of its large domestic distribution facilities to a real estate developer and will use the 85 billion yen in proceeds to strengthen its core businesses such as plasma screen TVs.
"Exporters are likely to lead the market on the yen's slide against the dollar. Financials are also expected to be bought amid growing expectations that the worst may soon be over" in the market turmoil of the last few months, said Kazuhiro Takahashi, a general manager of equity marketing at Daiwa Securities SMBC.
Still, he said the upside was also heavy as investors remain cautious about making big bets ahead of U.S. employment data due out later this week.
"The Nikkei is likely to test 17,000, but it's unlikely investors will keep buying to send the index further up," he said.
Market participants said the benchmark Nikkei average <.N225> will likely move between 16,900 and 17,100 on Tuesday.
KDDI Corp (9433.T: Quote, NEWS , Research) will be a focal point after the Nikkei business daily said the mobile phone operator plans to introduce a new fee system in November that cuts call charges by roughly 30 percent but raises handset prices in turn. KDDI rival NTT DoCoMo (9437.T: Quote, NEWS , Research) is expected to follow suit, the newspaper said.
Another stock in the spotlight is Matsushita Electric Industrial Co (6752.T: Quote, NEWS , Research) after the Nikkei said it sold all 17 of its large domestic distribution facilities to a real estate developer and will use the 85 billion yen in proceeds to strengthen its core businesses such as plasma screen TVs.
"Exporters are likely to lead the market on the yen's slide against the dollar. Financials are also expected to be bought amid growing expectations that the worst may soon be over" in the market turmoil of the last few months, said Kazuhiro Takahashi, a general manager of equity marketing at Daiwa Securities SMBC.
Still, he said the upside was also heavy as investors remain cautious about making big bets ahead of U.S. employment data due out later this week.
"The Nikkei is likely to test 17,000, but it's unlikely investors will keep buying to send the index further up," he said.
Market participants said the benchmark Nikkei average <.N225> will likely move between 16,900 and 17,100 on Tuesday.
SKorea's current account surplus narrows in August
SKorea's current account surplus narrows in August
SEOUL (Thomson Financial) - South Korea's current account surplus narrowed in August on higher overseas payments of royalties, interest and dividends and a smaller trade surplus, the Bank of Korea said Tuesday.
The central bank said the current account was in surplus by 610.3 million US dollars last month, compared to a revised surplus of 1.55 billion dollars in July. The figure for July was initially reported at 1.64 billion dollars.
August was the fourth straight month that a surplus was registered.
A surplus in August is uncommon. In previous years the current account has often been in deficit in August because of outbound tourism during the vacation season. But exports were brisker this August than in previous years.
The current account is the broadest measure of trade, covering the flow of goods, services and investment income across border
SEOUL (Thomson Financial) - South Korea's current account surplus narrowed in August on higher overseas payments of royalties, interest and dividends and a smaller trade surplus, the Bank of Korea said Tuesday.
The central bank said the current account was in surplus by 610.3 million US dollars last month, compared to a revised surplus of 1.55 billion dollars in July. The figure for July was initially reported at 1.64 billion dollars.
August was the fourth straight month that a surplus was registered.
A surplus in August is uncommon. In previous years the current account has often been in deficit in August because of outbound tourism during the vacation season. But exports were brisker this August than in previous years.
The current account is the broadest measure of trade, covering the flow of goods, services and investment income across border
Dolar rose
THE dollar rose slightly from record lows against the euro as investors cashed out bets against the US currency ahead of a fresh batch of economic data and central bank meetings this week. The greenback pared some gains after a measure of US manufacturing activity hit a low, but the gauge's employment measure registered growth.
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