Thu, Nov 22 2007, 05:15 GMT
http://www.djnewswires.com/eu
Japan Supermarket Sales Down 1.1% On Year In October
TOKYO (Dow Jones)--Japan's nationwide supermarket sales fell 1.1% on year to Y1.1339 trillion in October, adjusted for changes in the number of stores, the Japan Chain Stores Association said Thursday.
The fall marked the 22 straight month of decline.
The association said that sales of clothing fell 3.6% on year, while overall food product sales increased 0.2% from a year earlier
From: FXStreet.com
Wednesday, November 21, 2007
Fed minutes weigh heavily on dollar
Fed minutes weigh heavily on dollar
By Peter Garnham
The dollar fell to record lows against the euro and Swiss franc on Wednesday as investors digested the newly released minutes of the Federal Reserve’s October meeting.
These showed that the central bank remained concerned both about the risks of a sharper growth slowdown as well as a pick-up in inflation. The bank also saw the October interest rate cut as a “close call”.
“Although the minutes probably had the intention of conveying the message that further interest rate cuts are far from certain, this was ignored by the market,” said Geoffrey Yu at UBS.
“Fed forecasts, which for the first time accompanied the minutes, clearly showed the economy was on a downtrend and lower yields were immediately priced in, hurting the dollar as a result.”
The dollar fell as low as $1.4856 against the euro and SFr1.1025 against the Swiss franc. It hit Y108.27 against the Japanese yen, its weakest level since May 2005.
The dollar later recouped some of its losses to stand 0.2 per cent lower at $1.4790 against the euro by midday in New York, down 0.3 per cent at SFr1.1040 against the Swiss franc and 1.4 per cent lower at Y108.50 against the yen.
The yen also soared against other currencies as sliding equity markets saw investors shy away from risky carry trades, in which the low-yielding Japanese unit is sold to fund the purchase of riskier, higher-yielding assets.
The yen rose 1.8 per cent to Y160.10 against the euro and jumped 3.7 per cent to Y94.21 and 3 per cent to Y81.49, respectively, against the higher-yielding Australian and New Zealand dollars.
Hans Redeker at BNP Paribas said equity investors had been disappointed by the Fed minutes, which showed a central bank that downgraded its growth forecasts but was unwilling to ease interest rates.
“The minutes signalled that the Fed was no longer pre-emptive,” he said. “With this, equity markets are likely to face further selling pressure, suggesting the yen is set to break higher.”
The pound fell to its lowest level in 4½ years against the euro and lost ground across the board after minutes from the Bank of England’s November meeting showed two of its nine-strong monetary policy committee voted for a cut in UK interest rates.
Analysts expressed surprise that John Gieve, the central bank’s normally hawkish deputy governor ,ad joined with David Blanchflower, who was alone in voting for a cut in rates at the October meeting.
Chiara Corsa at UniCredit said the central bank could move to cut interest rates as early as next month.
The pound fell 0.5 per cent to 0.7211 against the euro, its weakest level since May 2003, lost 0.5 per cent to $2.0550 against the dollar and dropped 1.8 per cent to Y222.95 against the yen.
From: FT.com
By Peter Garnham
The dollar fell to record lows against the euro and Swiss franc on Wednesday as investors digested the newly released minutes of the Federal Reserve’s October meeting.
These showed that the central bank remained concerned both about the risks of a sharper growth slowdown as well as a pick-up in inflation. The bank also saw the October interest rate cut as a “close call”.
“Although the minutes probably had the intention of conveying the message that further interest rate cuts are far from certain, this was ignored by the market,” said Geoffrey Yu at UBS.
“Fed forecasts, which for the first time accompanied the minutes, clearly showed the economy was on a downtrend and lower yields were immediately priced in, hurting the dollar as a result.”
The dollar fell as low as $1.4856 against the euro and SFr1.1025 against the Swiss franc. It hit Y108.27 against the Japanese yen, its weakest level since May 2005.
The dollar later recouped some of its losses to stand 0.2 per cent lower at $1.4790 against the euro by midday in New York, down 0.3 per cent at SFr1.1040 against the Swiss franc and 1.4 per cent lower at Y108.50 against the yen.
The yen also soared against other currencies as sliding equity markets saw investors shy away from risky carry trades, in which the low-yielding Japanese unit is sold to fund the purchase of riskier, higher-yielding assets.
The yen rose 1.8 per cent to Y160.10 against the euro and jumped 3.7 per cent to Y94.21 and 3 per cent to Y81.49, respectively, against the higher-yielding Australian and New Zealand dollars.
Hans Redeker at BNP Paribas said equity investors had been disappointed by the Fed minutes, which showed a central bank that downgraded its growth forecasts but was unwilling to ease interest rates.
“The minutes signalled that the Fed was no longer pre-emptive,” he said. “With this, equity markets are likely to face further selling pressure, suggesting the yen is set to break higher.”
The pound fell to its lowest level in 4½ years against the euro and lost ground across the board after minutes from the Bank of England’s November meeting showed two of its nine-strong monetary policy committee voted for a cut in UK interest rates.
Analysts expressed surprise that John Gieve, the central bank’s normally hawkish deputy governor ,ad joined with David Blanchflower, who was alone in voting for a cut in rates at the October meeting.
Chiara Corsa at UniCredit said the central bank could move to cut interest rates as early as next month.
The pound fell 0.5 per cent to 0.7211 against the euro, its weakest level since May 2003, lost 0.5 per cent to $2.0550 against the dollar and dropped 1.8 per cent to Y222.95 against the yen.
From: FT.com
Dollar Poised for Drop to `Final' Support, Bank of America Says
By Ye Xie
Nov. 21 (Bloomberg) -- The U.S. Dollar Index may fall at least 1.6 percent by year-end to a level that equates to $1.506 per euro, as the Federal Reserve will lower borrowing costs to support the economy, according to Bank of America Corp.
The Dollar Index, which gauges the value of the dollar against six major currencies, including the euro and yen, may reach the ``final'' technical support level of 73.92, the bank said in a research note today. The index, traded on ICE Futures U.S. in New York, has declined 10 percent this year and touched 74.95 today, the lowest since its creation in 1973.
``The overall outlook for the dollar remains bleak,'' Kamal Sharma, a currency strategist at Bank of America in London, said in an interview. ``If we don't hold onto that level, there's limited chance for a rebound in the dollar. That adds a technical argument to the fundamental argument for remaining bearish on the dollar.''
The dollar traded at $1.4827 per euro at 12:18 p.m. in New York, after earlier touching an all-time low of $1.4856. The U.S. currency fell 1.3 percent today to 108.55 yen, touching a more than two-year low. The Dollar Index, composed of the euro, yen, pound, Canadian dollar, Swedish krona and Swiss franc, traded at 75.13.
The U.S. currency has lost 15 percent against the Canadian dollar this year and reached a 26-year low against the pound as the U.S. housing market slump and lower interest rates dimmed the allure of dollar-denominated assets.
Fed Forecast
The Fed cut its benchmark overnight interest rate by a half- percentage point to 4.5 percent on Sept. 18 and then by a quarter-point on Oct. 31. Futures contracts traded on the Chicago Board of Trade show a 90 percent chance the Fed will lower its rate to 4.25 percent when policy makers meet on Dec. 11.
The central bank will cut the rate a quarter-point at each of the next three meetings, to 3.75 percent by March 18, according to Bank of America. The bank, based in Charlotte, North Carolina, is the biggest U.S. bank by market capitalization.
U.S. 10-year note yields fell below 4 percent today for the first time since 2005. A government report yesterday showed homebuilding permits in the U.S. declined in October to their lowest level since 1993.
``We have ongoing stress in the financial system,'' said Sharma. ``The market continues to believe the Fed has to pull the trigger to cut rates. The fundamental argument for dollar weakness remains intact.''
The 73.92 level is derived from a 30-year trend line tracking the lows of the Dollar Index, according to Sharma.
``There are few significant support levels left,'' he said.
To contact the reporter on this story: Ye Xie in New York at
From: Bloomberg.com
Nov. 21 (Bloomberg) -- The U.S. Dollar Index may fall at least 1.6 percent by year-end to a level that equates to $1.506 per euro, as the Federal Reserve will lower borrowing costs to support the economy, according to Bank of America Corp.
The Dollar Index, which gauges the value of the dollar against six major currencies, including the euro and yen, may reach the ``final'' technical support level of 73.92, the bank said in a research note today. The index, traded on ICE Futures U.S. in New York, has declined 10 percent this year and touched 74.95 today, the lowest since its creation in 1973.
``The overall outlook for the dollar remains bleak,'' Kamal Sharma, a currency strategist at Bank of America in London, said in an interview. ``If we don't hold onto that level, there's limited chance for a rebound in the dollar. That adds a technical argument to the fundamental argument for remaining bearish on the dollar.''
The dollar traded at $1.4827 per euro at 12:18 p.m. in New York, after earlier touching an all-time low of $1.4856. The U.S. currency fell 1.3 percent today to 108.55 yen, touching a more than two-year low. The Dollar Index, composed of the euro, yen, pound, Canadian dollar, Swedish krona and Swiss franc, traded at 75.13.
The U.S. currency has lost 15 percent against the Canadian dollar this year and reached a 26-year low against the pound as the U.S. housing market slump and lower interest rates dimmed the allure of dollar-denominated assets.
Fed Forecast
The Fed cut its benchmark overnight interest rate by a half- percentage point to 4.5 percent on Sept. 18 and then by a quarter-point on Oct. 31. Futures contracts traded on the Chicago Board of Trade show a 90 percent chance the Fed will lower its rate to 4.25 percent when policy makers meet on Dec. 11.
The central bank will cut the rate a quarter-point at each of the next three meetings, to 3.75 percent by March 18, according to Bank of America. The bank, based in Charlotte, North Carolina, is the biggest U.S. bank by market capitalization.
U.S. 10-year note yields fell below 4 percent today for the first time since 2005. A government report yesterday showed homebuilding permits in the U.S. declined in October to their lowest level since 1993.
``We have ongoing stress in the financial system,'' said Sharma. ``The market continues to believe the Fed has to pull the trigger to cut rates. The fundamental argument for dollar weakness remains intact.''
The 73.92 level is derived from a 30-year trend line tracking the lows of the Dollar Index, according to Sharma.
``There are few significant support levels left,'' he said.
To contact the reporter on this story: Ye Xie in New York at
From: Bloomberg.com
Sunday, November 18, 2007
Gulf States Mull Revaluing Currencies, Person Says
Gulf States Mull Revaluing Currencies, Person Says (Update1)
By Matthew Brown and Anchalee Worrachate
Nov. 18 (Bloomberg) -- Gulf states, including Saudi Arabia and the United Arab Emirates, may revalue their currencies while maintaining their pegs to the U.S. dollar, a person familiar with Saudi monetary policy said.
The states may revalue by an unspecified amount in as soon as a month's time, the person, who declined to be identified because the matter is confidential, said yesterday. No final decision has been made, he said. The comments came as heads of state of the Organization of Petroleum Exporting Countries met in Riyadh.
Gulf states face record inflation, caused partly by the weakening dollar that has made imports from Europe more expensive. Consumer prices rose a record 4.9 percent in Saudi Arabia in August and inflation in the United Arab Emirates accelerated to a record 9.3 percent last year. Qatar has the highest inflation rate in the region, reaching 14.8 percent in the first quarter.
``It makes sense for them to do it,'' said Jens Nordvig, senior global markets economist at Goldman Sachs Group Inc. in New York. ``Given the emerging inflation pressures, there are very good reasons for them to allow currency appreciation.''
The decline in the value of the dollar is a ``concern'' to OPEC members, Qatari Energy Minister Abdullah Al-Attiyah said after a meeting of OPEC oil, finance and energy ministers in Riyadh on Nov. 16.
Currency Basket
Saudi Arabia, Qatar, Bahrain and Oman have repeatedly said they have no plans to change exchange rate policies. Still, U.A.E. Central Bank Governor Sultan Bin Nasser al-Suwaidi said on Nov. 15 the U.A.E. may drop the dirham's peg in favour of a basket of currencies. Some economists recommend such a move.
``We believe that the basket will be more beneficial'' than a revaluation, said Monica Malik, a Dubai-based economist with EFG Hermes, Egypt's largest investment bank. ``Just re-pegging the currency would mean that GCC interest rates will still have to follow U.S. rates and imported inflation would still increase if the dollar continues to weaken,'' she said.
``Linking GCC currencies to a trade-weighted basket would enable Gulf countries to counterbalance any dollar weakness and provide greater flexibility on monetary policy,'' Malik said.
Heads of state from the six Gulf Cooperation Council states will hold their annual meeting in Qatar on Dec. 3-4 and will discuss monetary policy and security. The person did not specify if a decision would be made then. Evidence has been gathered and will be presented to policy makers, he said without giving details.
`Unlikely' Move
The leaders will, though, take a decision on whether to abandon a proposed Gulf single currency, Hamad Saud al-Sayari, governor of the Saudi Arabian Monetary Agency, said after a meeting of finance ministers and central bank governors on Oct. 27.
``It's unlikely they are going to move to a flexible system,'' Nordvig said. ``If they're going to make an adjustment, they should make one that matters. Something in the 5 percent to 10 percent range seems like a range that would have some impact without being overly dramatic.''
The dollar slid to a record low of $1.4752 against the euro on Nov. 9, taking it down 10 percent since the start of this year, and has fallen versus 15 of the 16 most actively traded currencies tracked by Bloomberg in the past 10 1/2 months.
The Saudi riyal rose to a 20-year high after the Fed cut rates on Sept. 18 and the Saudi Arabian Monetary Agency chose not to follow. The riyal and the dirham rose this week after al-Suwaidi questioned the U.A.E.'s currency peg.
The riyal was trading at 3.725 to the dollar at 10.09 p.m. in Riyadh, 0.7 percent higher than the peg price of 3.75. Contracts to buy U.A.E. dirhams in 12 months time rose the most in at least 10 years on Nov. 15 after al-Suwaidi's comments, and were trading at a 2.5 percent premium to the spot price yesterday.
Venezuelan Support
Venezuela backed an Iranian proposal to add the group's concern over the falling dollar to a summit declaration to be made today. Saudi Arabian Foreign Minister Prince Saud Al-Faisal said that no mention of the dollar should be made in the declaration because he didn't want the U.S. currency to ``collapse.''
Nigerian Finance Minister Shamsudeen Usman said on Nov. 16 his country's law has been changed to allow it to diversify its foreign reserves out of dollars. Angola may shift its international reserves away from the dollar, Finance Minister Jose Pedro de Morais said.
OPEC's $6 billion development fund is hedging its exposure to the weakening dollar, Director-General Suleiman Jasir al-Herbish told reporters in Riyadh yesterday. ``The issue of the dollar in our investments, we are tackling it. We are hedging; we have other instruments.''
Internal Conflict
Saudi Arabia's King Abdullah said OPEC shouldn't make oil a source of conflict, contradicting Venezuelan President Hugo Chavez who wants the oil exporter group to become an active ``political agent.''
``Oil is an energy for building and prosperity, it shouldn't become a means of conflict,'' King Abdullah said at the start of the group's summit in Riyadh yesterday. ``Those who want OPEC to become an organization of monopoly and exploitation ignore the truth.''
OPEC, provider of more than 40 percent of the world's oil, is holding its third heads of state summit since it was founded in 1960. Saudi Arabia's foreign minister clashed yesterday with a push by Iran and Venezuela to debate pricing oil in currencies other than the U.S. dollar.
``OPEC was born as a geopolitical force and not only as a technical or economic one in the '60s,'' Chavez said, speaking before King Abdullah. ``We should continue to strengthen OPEC, but beyond that, OPEC should set itself up as an active political agent.''
`Fair' Level
The contrasting view on OPEC's role in the world comes a day after a disagreement between Venezuela's Oil Minister Rafael Ramirez and Al-Faisal on whether to move away from the dollar was accidentally aired on live television.
Chavez said in his speech yesterday that he's confident OPEC will do what it can to keep oil prices at a ``fair'' level, adding that if Iran was invaded, prices could easily rise to $200 a barrel.
Crude oil for December delivery rose $1.67 to $95.10 a barrel on Nov. 16 on the New York Mercantile Exchange.
The last OPEC heads of state summit was in 2000 in Venezuela and was hosted by Chavez, who was sworn in as president a year earlier. Iran and Venezuela both have tense political relations with the U.S.
Ibrahim Ibrahim, an executive at Qatar Petroleum, said that while Venezuela has helped OPEC become a stronger organization over the years, ``there is no need for OPEC to be a political force now. It just has to ensure that the oil market is stable.''
From: Bloomberg.com
By Matthew Brown and Anchalee Worrachate
Nov. 18 (Bloomberg) -- Gulf states, including Saudi Arabia and the United Arab Emirates, may revalue their currencies while maintaining their pegs to the U.S. dollar, a person familiar with Saudi monetary policy said.
The states may revalue by an unspecified amount in as soon as a month's time, the person, who declined to be identified because the matter is confidential, said yesterday. No final decision has been made, he said. The comments came as heads of state of the Organization of Petroleum Exporting Countries met in Riyadh.
Gulf states face record inflation, caused partly by the weakening dollar that has made imports from Europe more expensive. Consumer prices rose a record 4.9 percent in Saudi Arabia in August and inflation in the United Arab Emirates accelerated to a record 9.3 percent last year. Qatar has the highest inflation rate in the region, reaching 14.8 percent in the first quarter.
``It makes sense for them to do it,'' said Jens Nordvig, senior global markets economist at Goldman Sachs Group Inc. in New York. ``Given the emerging inflation pressures, there are very good reasons for them to allow currency appreciation.''
The decline in the value of the dollar is a ``concern'' to OPEC members, Qatari Energy Minister Abdullah Al-Attiyah said after a meeting of OPEC oil, finance and energy ministers in Riyadh on Nov. 16.
Currency Basket
Saudi Arabia, Qatar, Bahrain and Oman have repeatedly said they have no plans to change exchange rate policies. Still, U.A.E. Central Bank Governor Sultan Bin Nasser al-Suwaidi said on Nov. 15 the U.A.E. may drop the dirham's peg in favour of a basket of currencies. Some economists recommend such a move.
``We believe that the basket will be more beneficial'' than a revaluation, said Monica Malik, a Dubai-based economist with EFG Hermes, Egypt's largest investment bank. ``Just re-pegging the currency would mean that GCC interest rates will still have to follow U.S. rates and imported inflation would still increase if the dollar continues to weaken,'' she said.
``Linking GCC currencies to a trade-weighted basket would enable Gulf countries to counterbalance any dollar weakness and provide greater flexibility on monetary policy,'' Malik said.
Heads of state from the six Gulf Cooperation Council states will hold their annual meeting in Qatar on Dec. 3-4 and will discuss monetary policy and security. The person did not specify if a decision would be made then. Evidence has been gathered and will be presented to policy makers, he said without giving details.
`Unlikely' Move
The leaders will, though, take a decision on whether to abandon a proposed Gulf single currency, Hamad Saud al-Sayari, governor of the Saudi Arabian Monetary Agency, said after a meeting of finance ministers and central bank governors on Oct. 27.
``It's unlikely they are going to move to a flexible system,'' Nordvig said. ``If they're going to make an adjustment, they should make one that matters. Something in the 5 percent to 10 percent range seems like a range that would have some impact without being overly dramatic.''
The dollar slid to a record low of $1.4752 against the euro on Nov. 9, taking it down 10 percent since the start of this year, and has fallen versus 15 of the 16 most actively traded currencies tracked by Bloomberg in the past 10 1/2 months.
The Saudi riyal rose to a 20-year high after the Fed cut rates on Sept. 18 and the Saudi Arabian Monetary Agency chose not to follow. The riyal and the dirham rose this week after al-Suwaidi questioned the U.A.E.'s currency peg.
The riyal was trading at 3.725 to the dollar at 10.09 p.m. in Riyadh, 0.7 percent higher than the peg price of 3.75. Contracts to buy U.A.E. dirhams in 12 months time rose the most in at least 10 years on Nov. 15 after al-Suwaidi's comments, and were trading at a 2.5 percent premium to the spot price yesterday.
Venezuelan Support
Venezuela backed an Iranian proposal to add the group's concern over the falling dollar to a summit declaration to be made today. Saudi Arabian Foreign Minister Prince Saud Al-Faisal said that no mention of the dollar should be made in the declaration because he didn't want the U.S. currency to ``collapse.''
Nigerian Finance Minister Shamsudeen Usman said on Nov. 16 his country's law has been changed to allow it to diversify its foreign reserves out of dollars. Angola may shift its international reserves away from the dollar, Finance Minister Jose Pedro de Morais said.
OPEC's $6 billion development fund is hedging its exposure to the weakening dollar, Director-General Suleiman Jasir al-Herbish told reporters in Riyadh yesterday. ``The issue of the dollar in our investments, we are tackling it. We are hedging; we have other instruments.''
Internal Conflict
Saudi Arabia's King Abdullah said OPEC shouldn't make oil a source of conflict, contradicting Venezuelan President Hugo Chavez who wants the oil exporter group to become an active ``political agent.''
``Oil is an energy for building and prosperity, it shouldn't become a means of conflict,'' King Abdullah said at the start of the group's summit in Riyadh yesterday. ``Those who want OPEC to become an organization of monopoly and exploitation ignore the truth.''
OPEC, provider of more than 40 percent of the world's oil, is holding its third heads of state summit since it was founded in 1960. Saudi Arabia's foreign minister clashed yesterday with a push by Iran and Venezuela to debate pricing oil in currencies other than the U.S. dollar.
``OPEC was born as a geopolitical force and not only as a technical or economic one in the '60s,'' Chavez said, speaking before King Abdullah. ``We should continue to strengthen OPEC, but beyond that, OPEC should set itself up as an active political agent.''
`Fair' Level
The contrasting view on OPEC's role in the world comes a day after a disagreement between Venezuela's Oil Minister Rafael Ramirez and Al-Faisal on whether to move away from the dollar was accidentally aired on live television.
Chavez said in his speech yesterday that he's confident OPEC will do what it can to keep oil prices at a ``fair'' level, adding that if Iran was invaded, prices could easily rise to $200 a barrel.
Crude oil for December delivery rose $1.67 to $95.10 a barrel on Nov. 16 on the New York Mercantile Exchange.
The last OPEC heads of state summit was in 2000 in Venezuela and was hosted by Chavez, who was sworn in as president a year earlier. Iran and Venezuela both have tense political relations with the U.S.
Ibrahim Ibrahim, an executive at Qatar Petroleum, said that while Venezuela has helped OPEC become a stronger organization over the years, ``there is no need for OPEC to be a political force now. It just has to ensure that the oil market is stable.''
From: Bloomberg.com
Betting Against the Dollar? This Time, Asia May Deserve a Look
Betting Against the Dollar? This Time, Asia May Deserve a Look
Article Tools Sponsored By
By WILLIAM J. HOLSTEIN
Published: November 18, 2007
JIM O’NEILL, the chief economist of Goldman Sachs, has been down on the American dollar for at least 10 years. “Being bearish on the dollar has been one of the easiest things to do,” Mr. O’Neill said. And there are still lucrative currency bets to be made, Mr. O’Neill and many other financial professionals say, even though the direction of the American currency isn’t as obvious today. “It’s getting trickier,” Mr. O’Neill said.
Skip to next paragraph
Haruyoshi Yamaguchi/Bloomberg News
A yen-to-the-dollar rate last Monday in Tokyo. The dollar has not fallen nearly as much against Asian currencies as it has against the euro.
One reason for the difficulty is that the dollar has lost so much value against the euro, the British pound and the Canadian dollar that it may not have much further to go before it reverses course against them. Mr. O’Neill, who is based in London, points out that while it took just 84.5 cents to buy a euro as recently as six years ago, it now takes $1.45, a move of more than 70 percent.
If the cheap dollar continues to help spur American exports and thereby reduce the trade deficit, Mr. O’Neill says he thinks that the dollar may be near its bottom against those currencies. “The dollar could weaken further in the very short term,” he says, “but a year from now I personally expect the dollar will be stronger against most European currencies.”
But that’s not likely to be the case with Asian currencies, like those of China, Japan, India and even tiny Singapore, in his view. “Many of these economies are seeing enormous growth,” Mr. O’Neill said. And the dollar has not lost as nearly much value against these currencies, which tend to be controlled or influenced by the government. China intervenes in foreign exchange markets to manage the value of the yuan and has allowed an upward drift of only about 5 percent year to date. Japan does not intervene, but its huge pools of liquidity and near-zero interest rates have spawned the so-called carry trade, in which hedge funds and other major institutional investors borrow money in yen and convert the yen to other currencies to invest in other markets. The practical effect has been much the same as government intervention: the yen has risen only slightly against the dollar.
Despite some Asian governments’ desire to keep their currencies where they are, many experts believe that big upward moves are inevitable throughout the region. “The game is just getting ramped up,” said Arthur P. Steinmetz, senior vice president and portfolio manager at the OppenheimerFunds in New York. “There are some powerful fundamental forces that are going to make this interesting.”
One of the most important, says Mr. Steinmetz, who manages $22 billion in mutual funds, is the direction of interest rates in the United States. “The biggest driver of movement in currencies is interest rate differentials,” he said. “Money naturally flows to countries with high interest rates and away from countries with low interest rates. The United States is a low-yielding country and interest rates are going lower because of what the Federal Reserve is doing.”
Add it all up and it may be time for individual investors to make decisions not only about whether to invest in dollar-denominated or other instruments, but also whether to choose mutual funds and exchange traded funds that have the appropriate exposure to Asian currencies rather than relying on plain-vanilla international funds that may be equally exposed to different regions of the world. (Very few experts recommend that individual investors become involved in foreign-exchange derivative trading or in buying individual non-American stocks.)
But charting a winning Asian currency strategy is hard because stock markets in China, Hong Kong, India and elsewhere in the region are at or near all-time highs — China’s stock market has more than doubled this year — and a vast majority of experts expect corrections if not short-term crashes.
What’s an investor to do? “I would invest through funds whose managers know how to shift from what’s too high to what’s cheap,” said Roger Kubarych, chief United States economist for UniCredit Markets and Investment Banking, who is based in New York. “That’s why you go to professionals. Any individual would have to study the markets for two or three years to understand them. Starting from a standing stop, you’re better off in mutual funds. There’s no doubt about it.”
From: Nytimes.com
Article Tools Sponsored By
By WILLIAM J. HOLSTEIN
Published: November 18, 2007
JIM O’NEILL, the chief economist of Goldman Sachs, has been down on the American dollar for at least 10 years. “Being bearish on the dollar has been one of the easiest things to do,” Mr. O’Neill said. And there are still lucrative currency bets to be made, Mr. O’Neill and many other financial professionals say, even though the direction of the American currency isn’t as obvious today. “It’s getting trickier,” Mr. O’Neill said.
Skip to next paragraph
Haruyoshi Yamaguchi/Bloomberg News
A yen-to-the-dollar rate last Monday in Tokyo. The dollar has not fallen nearly as much against Asian currencies as it has against the euro.
One reason for the difficulty is that the dollar has lost so much value against the euro, the British pound and the Canadian dollar that it may not have much further to go before it reverses course against them. Mr. O’Neill, who is based in London, points out that while it took just 84.5 cents to buy a euro as recently as six years ago, it now takes $1.45, a move of more than 70 percent.
If the cheap dollar continues to help spur American exports and thereby reduce the trade deficit, Mr. O’Neill says he thinks that the dollar may be near its bottom against those currencies. “The dollar could weaken further in the very short term,” he says, “but a year from now I personally expect the dollar will be stronger against most European currencies.”
But that’s not likely to be the case with Asian currencies, like those of China, Japan, India and even tiny Singapore, in his view. “Many of these economies are seeing enormous growth,” Mr. O’Neill said. And the dollar has not lost as nearly much value against these currencies, which tend to be controlled or influenced by the government. China intervenes in foreign exchange markets to manage the value of the yuan and has allowed an upward drift of only about 5 percent year to date. Japan does not intervene, but its huge pools of liquidity and near-zero interest rates have spawned the so-called carry trade, in which hedge funds and other major institutional investors borrow money in yen and convert the yen to other currencies to invest in other markets. The practical effect has been much the same as government intervention: the yen has risen only slightly against the dollar.
Despite some Asian governments’ desire to keep their currencies where they are, many experts believe that big upward moves are inevitable throughout the region. “The game is just getting ramped up,” said Arthur P. Steinmetz, senior vice president and portfolio manager at the OppenheimerFunds in New York. “There are some powerful fundamental forces that are going to make this interesting.”
One of the most important, says Mr. Steinmetz, who manages $22 billion in mutual funds, is the direction of interest rates in the United States. “The biggest driver of movement in currencies is interest rate differentials,” he said. “Money naturally flows to countries with high interest rates and away from countries with low interest rates. The United States is a low-yielding country and interest rates are going lower because of what the Federal Reserve is doing.”
Add it all up and it may be time for individual investors to make decisions not only about whether to invest in dollar-denominated or other instruments, but also whether to choose mutual funds and exchange traded funds that have the appropriate exposure to Asian currencies rather than relying on plain-vanilla international funds that may be equally exposed to different regions of the world. (Very few experts recommend that individual investors become involved in foreign-exchange derivative trading or in buying individual non-American stocks.)
But charting a winning Asian currency strategy is hard because stock markets in China, Hong Kong, India and elsewhere in the region are at or near all-time highs — China’s stock market has more than doubled this year — and a vast majority of experts expect corrections if not short-term crashes.
What’s an investor to do? “I would invest through funds whose managers know how to shift from what’s too high to what’s cheap,” said Roger Kubarych, chief United States economist for UniCredit Markets and Investment Banking, who is based in New York. “That’s why you go to professionals. Any individual would have to study the markets for two or three years to understand them. Starting from a standing stop, you’re better off in mutual funds. There’s no doubt about it.”
From: Nytimes.com
Greenspan Says Dollar's Decline Has No `Fundamental' Impact
Greenspan Says Dollar's Decline Has No `Fundamental' Impact
By Anthony Massucci
Nov. 18 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said the dollar's decline hasn't affected the economy and is a ``market phenomenon.''
``So long as the dollar weakness does not create inflation, which is a major concern around the globe for everyone who watches the exchange rate, then I think it's a market phenomenon, which aside from those who travel the world, has no real fundamental economic consequences,'' he said.
The U.S. economy outside of the housing industry is ``doing reasonably well,'' Greenspan told an investor conference in New York today. ``If we can get beyond this housing problem I think we'll do pretty well.''
To contact the reporter on this story: Anthony Massucci in New York at amassucc@bloomberg.net .
Last Updated: November 18, 2007 09:44 EST
From: Bloomberg.com
By Anthony Massucci
Nov. 18 (Bloomberg) -- Former Federal Reserve Chairman Alan Greenspan said the dollar's decline hasn't affected the economy and is a ``market phenomenon.''
``So long as the dollar weakness does not create inflation, which is a major concern around the globe for everyone who watches the exchange rate, then I think it's a market phenomenon, which aside from those who travel the world, has no real fundamental economic consequences,'' he said.
The U.S. economy outside of the housing industry is ``doing reasonably well,'' Greenspan told an investor conference in New York today. ``If we can get beyond this housing problem I think we'll do pretty well.''
To contact the reporter on this story: Anthony Massucci in New York at amassucc@bloomberg.net .
Last Updated: November 18, 2007 09:44 EST
From: Bloomberg.com
Thursday, November 15, 2007
Yen Turns Lower Against Majors
Yen Turns Lower Against Majors
(RTTNews) - The Japanese yen has turned lower against major world currencies. The yen is trading lower vs. the euro, British pound, U.S. dollar and Swiss franc
(RTTNews) - The Japanese yen has turned lower against major world currencies. The yen is trading lower vs. the euro, British pound, U.S. dollar and Swiss franc
China orders Shenzhen banks to limit cash withdrawals - report
Fri, Nov 16 2007, 01:51 GMT
http://www.afxnews.com
BEIJING (XFN-ASIA) - Commercial banks in the southern Chinese city of Shenzhen have been ordered to limit cash withdrawals in a bid to cut off sources of unauthorized investment in Hong Kong stocks, the official China Securities Journal reported.
The newspaper, citing banking sources, said the local branch of the People's Bank of China imposed limits of 30,000 yuan for over-the-counter transactions by individuals and 100,000 yuan for corporate accounts.
Previously there were no restrictions on teller withdrawals, except for branch requirements to withdraw large amounts by appointment.
The 20,000 yuan daily ATM withdrawal limit was not affected, it added.
(1 usd = 7.43 yuan)
http://www.afxnews.com
BEIJING (XFN-ASIA) - Commercial banks in the southern Chinese city of Shenzhen have been ordered to limit cash withdrawals in a bid to cut off sources of unauthorized investment in Hong Kong stocks, the official China Securities Journal reported.
The newspaper, citing banking sources, said the local branch of the People's Bank of China imposed limits of 30,000 yuan for over-the-counter transactions by individuals and 100,000 yuan for corporate accounts.
Previously there were no restrictions on teller withdrawals, except for branch requirements to withdraw large amounts by appointment.
The 20,000 yuan daily ATM withdrawal limit was not affected, it added.
(1 usd = 7.43 yuan)
Japanese Market Falls On Weak Lead From U.S., Stronger Yen
Japanese Market Falls On Weak Lead From U.S., Stronger Yen
(RTTNews) - Friday, Tokyo shares opened sharply lower, tracking the fall on Wall Street overnight. The appreciation of the yen and uncertainty about the government's fiscal policy also weighed on market sentiment.
At 10:11 a.m. local time, the benchmark Nikkei 225 index was down 254.70 points at 15,141.60, while the broader Topix index for all First Section issues on the Tokyo Stock Exchange was down 29.21 points at 1,469.65.
In the U.S., department store operator J.C. Penney reported a 9% drop in fiscal third-quarter profit on weak sales and cut its fourth-quarter outlook. Additionally, Wells Fargo president and chief executive, John Stumpf, said that the U.S. housing market is seeing its steepest decline since the Great Depression.
The U.S. dollar traded at the mid 110-yen level in early trade in Tokyo. At 9:51 a.m. local time, the dollar was quoted at 110.50-110.52, down 0.89 yen from Thursday's 5:00 p.m. quotes of 111.39-111.41 yen.
In the oil space, Nippon Oil plunged 2.7%, Nippon Mining Holdings plummeted 2.3%, and Showa Shell Sekiyu KK lost 1.0%.
Among banks, Mitsubishi UFJ Financial Group fell 3.5%, Sumitomo Mitsui Financial Group gave away 2.9%, Mizuho Financial Group tumbled 4.0%, and Resona Holdings lost 3.0%.
Automaker Honda lost 1.3%, Toyota tumbled 1.6%, Nissan fell 2.01%, and Suzuki dropped 0.6%. Mazda advanced 0.4%.
Among high tech stocks, Kyocera slipped 0.6%, Fanuc lost 1.1%, Fujitsu fell 1.4%, Matsushita Electric Industrial gave away 1.1%, Sony slipped 1.1%, NEC plunged 2.3%, and Oki Electric Industry plummeted 3.1%. Advantest gained 1.0% and Tokyo Electron rose 1.2%.
(RTTNews) - Friday, Tokyo shares opened sharply lower, tracking the fall on Wall Street overnight. The appreciation of the yen and uncertainty about the government's fiscal policy also weighed on market sentiment.
At 10:11 a.m. local time, the benchmark Nikkei 225 index was down 254.70 points at 15,141.60, while the broader Topix index for all First Section issues on the Tokyo Stock Exchange was down 29.21 points at 1,469.65.
In the U.S., department store operator J.C. Penney reported a 9% drop in fiscal third-quarter profit on weak sales and cut its fourth-quarter outlook. Additionally, Wells Fargo president and chief executive, John Stumpf, said that the U.S. housing market is seeing its steepest decline since the Great Depression.
The U.S. dollar traded at the mid 110-yen level in early trade in Tokyo. At 9:51 a.m. local time, the dollar was quoted at 110.50-110.52, down 0.89 yen from Thursday's 5:00 p.m. quotes of 111.39-111.41 yen.
In the oil space, Nippon Oil plunged 2.7%, Nippon Mining Holdings plummeted 2.3%, and Showa Shell Sekiyu KK lost 1.0%.
Among banks, Mitsubishi UFJ Financial Group fell 3.5%, Sumitomo Mitsui Financial Group gave away 2.9%, Mizuho Financial Group tumbled 4.0%, and Resona Holdings lost 3.0%.
Automaker Honda lost 1.3%, Toyota tumbled 1.6%, Nissan fell 2.01%, and Suzuki dropped 0.6%. Mazda advanced 0.4%.
Among high tech stocks, Kyocera slipped 0.6%, Fanuc lost 1.1%, Fujitsu fell 1.4%, Matsushita Electric Industrial gave away 1.1%, Sony slipped 1.1%, NEC plunged 2.3%, and Oki Electric Industry plummeted 3.1%. Advantest gained 1.0% and Tokyo Electron rose 1.2%.
US Dollar Rallies Despite Plummeting Treasury Bond Yields - What Gives?
US Dollar Rallies Despite Plummeting Treasury Bond Yields - What Gives?
Thursday, 15 November 2007 18:37:31 GMT
Written by David Rodriguez, Currency Analyst
The US dollar continued to recover against major currency counterparts, as deterioration in global risk sentiment encouraged currency traders to cover dollar-short positions. The greenback saw the bulk of its gains through early morning European trade. Germany’s DAX index shed a sizeable 1.5 percent and London’s FTSE 100 lost a similar 1.1 percent—sinking the euro and the British pound against its downtrodden US counterpart. A similar unwind in carry trades made the Japanese Yen the strongest performer on the day, while the high-yielding Australian and New Zealand dollars slipped further off of recent heights.
Mixed US economic data had little effect on the domestic currency, with an exactly as-expected result in the key Consumer Price Index report having no immediate effect on market sentiment. Indeed, interest rate futures remained almost exactly unchanged in immediate aftermath of the highly-anticipated inflation report. A later tumble in the Dow Jones Industrial Average was the most market-moving event of the session, and it seems as though risk sentiment continues to deteriorate into late New York trading. Given a sharp decline in US Treasury Bond yields, investors are clearly showing their reluctance to buy and hold risky US stocks.
Interest rate futures have responded in kind, and the implied yield on the December Federal Reserves Funds Future fell a significant 5 basis points to 4.32 percent. Such price action shows that traders predict a 92 percent chance that the Fed will cut interest rates by a minimum of 25 basis points to 4.25 percent. Under and markets continue to expect that the US Federal Reserve will cut interest rates at its upcoming meeting. Under normal market conditions, falling US bond yields and Fed rate expectations would hurt the dollar. Yet we continue to see market risk aversion trump changes in yield differentials across key risk-sensitive currencies.
The Dow Jones Industrial Average continued to suffer on market risk aversion, losing 0.4 percent to 13,180 through late New York trading. Losses were clearly distributed among the broad spectrum of US stocks, as the S&P 500 was the largest decliner at -0.8 percent to 1,459. The tech-heavy NASDAQ Composite was not far behind as it shed a further 0.6 percent to 2,630.
US Treasury Markets were unsurprisingly volatile through the trading session. In a move one would normally see in emerging market government debt, the 2-year US Treasury Note shed a whopping 14 basis points to 3.36 percent. The combination of worsening risk sentiment and interest rate outlook sunk the yield to fresh 33-month lows, and a strong uptrend in bond prices showed few signs of abating through active trading.
Written by David Rodríguez, Currency Analyst for DailyFX.com
Thursday, 15 November 2007 18:37:31 GMT
Written by David Rodriguez, Currency Analyst
The US dollar continued to recover against major currency counterparts, as deterioration in global risk sentiment encouraged currency traders to cover dollar-short positions. The greenback saw the bulk of its gains through early morning European trade. Germany’s DAX index shed a sizeable 1.5 percent and London’s FTSE 100 lost a similar 1.1 percent—sinking the euro and the British pound against its downtrodden US counterpart. A similar unwind in carry trades made the Japanese Yen the strongest performer on the day, while the high-yielding Australian and New Zealand dollars slipped further off of recent heights.
Mixed US economic data had little effect on the domestic currency, with an exactly as-expected result in the key Consumer Price Index report having no immediate effect on market sentiment. Indeed, interest rate futures remained almost exactly unchanged in immediate aftermath of the highly-anticipated inflation report. A later tumble in the Dow Jones Industrial Average was the most market-moving event of the session, and it seems as though risk sentiment continues to deteriorate into late New York trading. Given a sharp decline in US Treasury Bond yields, investors are clearly showing their reluctance to buy and hold risky US stocks.
Interest rate futures have responded in kind, and the implied yield on the December Federal Reserves Funds Future fell a significant 5 basis points to 4.32 percent. Such price action shows that traders predict a 92 percent chance that the Fed will cut interest rates by a minimum of 25 basis points to 4.25 percent. Under and markets continue to expect that the US Federal Reserve will cut interest rates at its upcoming meeting. Under normal market conditions, falling US bond yields and Fed rate expectations would hurt the dollar. Yet we continue to see market risk aversion trump changes in yield differentials across key risk-sensitive currencies.
The Dow Jones Industrial Average continued to suffer on market risk aversion, losing 0.4 percent to 13,180 through late New York trading. Losses were clearly distributed among the broad spectrum of US stocks, as the S&P 500 was the largest decliner at -0.8 percent to 1,459. The tech-heavy NASDAQ Composite was not far behind as it shed a further 0.6 percent to 2,630.
US Treasury Markets were unsurprisingly volatile through the trading session. In a move one would normally see in emerging market government debt, the 2-year US Treasury Note shed a whopping 14 basis points to 3.36 percent. The combination of worsening risk sentiment and interest rate outlook sunk the yield to fresh 33-month lows, and a strong uptrend in bond prices showed few signs of abating through active trading.
Written by David Rodríguez, Currency Analyst for DailyFX.com
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