Currencies

[Muthukali]

Dollar Drops Most in 11 Months as Fed Follows ECB With Stimulus

By Allison Bennett and Joseph Ciolli - Sep 15, 2012 12:00 PM GMT+0800

The dollar fell by the most in 11 months against the euro after the Federal Reserve said it would start a third round of asset purchases to boost the economy, which tends to debase the currency.
The greenback completed its longest stretch of weekly losses against the 17-nation currency since October 2010 after the European Central Bank said last week it would purchase bonds to address the region’s debt crisis. The dollar touched its lowest level in seven months against the yen before Japanese officials signaled they are ready to intervene to stem the currency’s strength. The Bank of Japan holds a policy meeting Sept. 19.
“The shift in the policy statement from the Fed was a welcomed surprise for risk-loving investors,” said Andrew Wilkinson, chief economic strategist at Miller Tabak in New York. “The other driver behind the scenes is the ECB, which has launched the boldest action in defense of the euro.”
Wilkinson said he expects the euro to rally to $1.3450 by year-end.
The U.S. currency fell 2.5 percent this week to $1.3130, after reaching a four-month low of $1.3169 yesterday. It rose 0.2 percent to 78.39 yen, after touching 77.13 on Sept. 13, the least since Feb. 9. The euro added 2.7 percent to 102.93 yen.

Dollar Bears
Futures traders boosted aggregate bets the dollar would fall against eight major currencies to a 13-month high.
Net-bets for a dollar decline were 228,176 in the week ended Sept. 11, up 72 percent from 132,997 the previous week, according to Commodity Futures Trading Commission data compiled by Bloomberg. That is the highest since Aug. 5, 2011.
The U.S. currency fell 1.3 percent this week versus the currencies of nine developed nation counterparts, according to the Bloomberg Correlation-Weighted Indexes. The yen had the biggest decline with 1.5 percent.
The Dollar Index, which tracks the greenback against the currencies of six U.S. trading partners, declined for a fourth week. The 1.8 percent loss is the biggest since October 2011. It fell to 78.851 after touching 78.601, the lowest since Feb. 29.
The Fed said it will expand its holdings of long-term securities with open-ended purchases of $40 billion a month of mortgage debt in a third round of quantitative easing. The Federal Open Market Committee said it would probably hold the federal funds rate near zero “at least through mid-2015.” Since January, the Fed had said the rate was likely to stay low at least through late 2014.

Liquid Markets
Anticipation of additional liquidity from the bond-buying program pushed the Australian currency, where interest rates are 3.5 percent, to a one-month high of $1.0625 versus the greenback. New Zealand’s dollar rallied to a six-month high of 83.54 U.S. cents.
The shared currency was buoyed against major counterparts as ECB President Mario Draghi said last week that policy makers agreed on an unlimited debt-buying program to address region’s debt crisis. A German court dismissed motions this week seeking to block the region’s bailout fund, while setting a cap of about 190 billion euros ($249 billion).
“The ECB actions were expected by the markets; it is helping the market to move away from two key risks, namely the financing of the U.S. and peripheral risks in Europe,” Sebastien Galy, a senior foreign-exchange strategist at Societe Generale SA in New York said Sept. 13.
The cost of options granting the right to buy the euro against the Swiss franc climbed above the price allowing for sales for the first time since April 4. So-called three-month 25-delta risk reversal rate climbed to three basis points, or 0.03 percentage point, yesterday.

Bank Cap
The Swiss National Bank put a cap of 1.20 per euro on the franc in September 2011 to limit its strength after investors sought the currency as a refuge from the euro-area’s debt crisis.
The euro’s rally versus the dollar may stall as the 14-day relative strength index for the shared currency versus the greenback surged to 79.1. A reading of more than 70 indicates an asset may have moved too far, too quickly and may be due for a correction.
The yen fell against a majority of its 16 most-traded peers after Finance Minister Jun Azumi signaled he’s ready to intervene to weaken the currency.
Japan’s Azumi told reporters yesterday that he’ll take “decisive action,” if necessary. Azumi ordered the Bank of Japan to sell yen in markets on Oct. 31 after the yen strengthened to a postwar record of 75.35 per dollar.

Speculative Trades
Vice Finance Minister Takehiko Nakao told reporters in Tokyo on Sept. 13 the recent surge in the yen against the dollar has been “obviously speculative” and that Japan can’t overlook such moves.
There are “heightened intervention concerns, an easing of safe-haven demand for yen, and building expectations that the Bank of Japan, under increasing government pressure, may ease monetary policy next week,” Lee Hardman, a foreign-exchange strategist at Bank of Tokyo-Mitsubishi UFJ Ltd. in London, said yesterday.
The rand fell against all of the most-traded currencies tracked by Bloomberg as unrest in South Africa’s mining industry outweighed Fed stimulus measures. Workers at mines are holding illegal protests to demand higher pay, causing their companies to lose thousands of ounces of production each day.
The currency of Africa’s largest economy weakened against major currencies, falling 0.4 percent to 8.2059 per dollar.
Russia’s ruble had the biggest advance against the dollar among major global currencies after the country’s central bank raised the refinancing rate to 8.25 percent from 8 percent, the first increase since April 2011.
The currency rose 3.8 percent to 30.4579 per dollar.

To contact the reporters on this story: Allison Bennett in New York at [email protected]; Joseph Ciolli in New York at [email protected]

To contact the editor responsible for this story: Dave Liedtka at [email protected]

 

[Muthukali]

Yen Climbs Against Most Peers Before BOJ Meets; Aussie Declines

By Masaki Kondo - Sep 17, 2012 12:25 PM GMT+0800

The yen rose against most of its major peers before the Bank of Japan (8301) starts a two-day meeting tomorrow as investors weighed whether it will follow the Federal Reserve in expanding monetary easing.

The euro snapped a four-day advance versus the yen before a German report tomorrow that may show investor confidence remains weak in the region’s biggest economy. Australia’s dollar, known as the Aussie, dropped as territorial and trade disputes involving China damped risk appetite among investors.

“What the Fed has done increases the pressure that was already evident on the Bank of Japan politically to take further action against yen strength,” said Ray Attrill, global co-head of foreign- exchange strategy at National Australia Bank Ltd. in Sydney. If the BOJ meeting “passes off without any new policy initiatives on Wednesday, then I would expect to see dollar-yen probably back down to the lows that we saw last week.”

The yen rose 0.2 percent to 102.75 per euro as of 12:14 p.m. in Singapore after falling 3.1 percent in the past four days. It advanced 0.2 percent to 78.25 per dollar after reaching 77.13 on Sept. 13, the strongest since Feb. 9. The euro was little changed at $1.3131. Japan’s markets are closed today for a national holiday.

The U.S. central bank on Sept. 13 decided to expand its balance sheet with open-ended purchases of $40 billion a month of mortgage debt to bolster the labor market, following two rounds of a $2.3 trillion quantitative-easing program from 2008 to 2011.

Monetary Policy
BOJ Governor Masaaki Shirakawa said on Sept. 6 that the yen’s appreciation causes a decline in Japan’s exports and that its negative effect is “dominant.”

Fed Bank of Chicago President Charles Evans and New York Fed chief William C. Dudley are due to talk about the economy in speeches tomorrow. Evans, who doesn’t vote this year on monetary policy, urged the central bank on Aug. 27 to begin a third round of bond buying. Dudley voted for the Fed’s Sept. 13 decision on debt purchases.

“The prevailing sentiment is that the U.S. dollar is going to remain weak,” said NAB’s Attrill.

The yen has risen 6 percent in the past six months, the biggest gainer among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar has fallen 1.3 percent during the period, while the euro depreciated 1.6 percent.

The ZEW Center for European Economic Research is forecast to say its German index of investor and analyst expectations, which aims to predict economic developments six months in advance, was minus 20 in September, according to a Bloomberg News survey of economists. The gauge slid to minus 25.5 last month, the lowest this year.

Territory Dispute
The Australian dollar weakened against 13 of its 16 most- traded counterparts. Demonstrators took to the streets in a dozen cities across China, Australia’s biggest trading partner, calling for Chinese sovereignty over islands that are also claimed by Japan.

Tensions escalated after Japan said last week it would purchase the territory from a private Japanese owner, prompting China to dispatch government vessels near the islands known as Senkaku in Japanese and Diaoyu in Chinese. Japan’s foreign ministry said yesterday that Shinichi Nishimiya died of an unspecified illness, five days after his appointment as an ambassador to China.

“Geopolitical tensions between China and Japan will not be good for the economy and trade,” said Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore. “There’s room for selling the Aussie back again.”

The U.S. will announce a trade complaint against China today, alleging impermissible subsidies of auto- and auto-parts exports, an according to an Obama administration official who asked to speak on condition of anonymity in advance of the public announcement.

Australia’s currency lost 0.2 percent to $1.0533 and dropped 0.3 percent to 82.45 yen.

To contact the reporter on this story: Masaki Kondo in Singapore at [email protected]

To contact the editor responsible for this story: Rocky Swift at [email protected]

 

[Muthukali]

Aussie Drops From Near 6-Month High on Europe Concern

By Kristine Aquino - Sep 17, 2012 12:33 PM GMT+0800

The Australian dollar declined from near its strongest level in almost six months as concern European leaders are struggling to find agreement on debt-crisis solutions curbed demand for higher-yielding assets.

The so-called Aussie slid versus most of its 16 major counterparts before Spanish Prime Minister Mariano Rajoy travels to Rome for talks with Italian Prime Minister Mario Monti this week. Australia’s currency and its New Zealand counterpart fell against the yen amid escalating tensions between Japan and China, Asia’s biggest economies, over the ownership of disputed islands.

“The plans are laid in Europe, but the actual implementation will be the challenge,” said Lee Wai Tuck, a currency strategist at Forecast Pte in Singapore. “Geopolitical tensions between China and Japan will not be good for the economy and trade. There’s room for selling the Aussie back again.”

Australia’s dollar lost 0.2 percent to $1.0533 at 2:22 p.m. in Sydney from $1.0551 on Sept. 14, when it rose to $1.0625, the highest since March 20. It fell 0.3 percent to 82.45 yen. New Zealand’s dollar fell 0.1 percent to 82.82 U.S. cents from last week, when it touched 83.54, the strongest since March 2. The so-called kiwi traded at 64.81 yen, 0.3 percent below its 64.98 closing price on Sept. 14.

Australian bonds fell, pushing the 10-year yield up 10 basis points, or 0.1 percentage point, to 3.38 percent. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, rose 4 basis points to 2.78 percent.

Meeting Deadlock
A meeting of European Union finance ministers last week in the Cypriot capital of Nicosia deadlocked over the timetable for a more unified European Union banking sector. The ministers also disagreed over the terms of bailout requests and the role of the European Central Bank.

Spain’s Rajoy will meet Italy’s Monti on Sept. 21. The following day, German Chancellor Angela Merkel will hold talks with French President Francois Hollande at a commemoration in Ludwigsburg, Germany.

The Reserve Bank of Australia today released information on the composition of other central banks’ foreign-exchange reserves in response to a Bloomberg News request under the Freedom of Information Act. Fifteen central banks hold Australian dollar reserves -- including Sweden, Switzerland, Russia, Poland, Korea -- while eight eithers possibly do, the RBA said.

Disputed Islands
The Aussie has weakened 2.1 percent in the past month, the biggest drop after the U.S. dollar among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. New Zealand’s dollar lost 0.6 percent.

The South Pacific currencies slid as a territorial dispute between China and Japan worsened, with Prime Minister Yoshihiko Noda saying he’ll demand the Chinese government ensure the safety of Japanese citizens amid protests in a dozen cities including Beijing, Shanghai and Guangzhou.

Demonstrators called for Chinese sovereignty over disputed islands, known as Senkaku in Japanese and Diaoyu in Chinese, and the boycott of Japanese goods. Tensions escalated after Noda’s government said last week it would purchase the territory from a private Japanese owner, prompting China to dispatch government vessels near the area. China is Australia’s largest trading partner and New Zealand’s second-biggest export destination.

The U.S. will announce a trade complaint against China today, alleging impermissible subsidies of auto- and auto-parts exports, an according to an Obama administration official who asked to speak on condition of anonymity.

To contact the reporter on this story: Kristine Aquino in Singapore at [email protected]

To contact the editor responsible for this story: Rocky Swift at [email protected]

 

[Muthukali]

Canada Dollar Declines as Oil Tumbles on Slowing Economic Growth
By Katia Dmitrieva - Sep 18, 2012 5:39 AM GMT+0800

The Canadian dollar declined for a second day against its U.S. counterpart as oil fell the most in almost three months and stocks slipped after signs of a slowing economy damped investor demand for higher-yielding assets.

The currency dropped as Canadian existing home sales fell the most in more than two years in August and a regional measure of U.S. manufacturing contracted more than forecast. The currency declined from almost a 13-month high as European Union finance ministers were deadlocked over efforts to quell the region’s sovereign-debt crisis. Canada’s inflation rate is expected to hold steady at 1.3 percent when the report is released on Sept. 21.

“The Canadian dollar fell from the tremendous amount of selling pressure on oil in the afternoon,” Blake Jespersen, managing director of foreign exchange in Toronto at Bank of Montreal (BMO), said in a phone interview. “There’s always been a correlation between oil and the Canadian dollar. Traders and investors are looking at the slide in oil and saying that the Canadian dollar should also be weaker.”

The loonie, as the currency is known for the image of the waterfowl on the C$1 coin, declined 0.4 percent to 97.48 cents per U.S. dollar. The currency has gained 4.8 percent this year and touched 96.33 on Sept. 14, the strongest level since August 2011. One Canadian dollar buys $1.0259.

Canadian bonds declined, with the yield on the 10-year benchmark falling two basis points, or 0.02 percentage point, to 1.95 percent. The 2.75 security maturing in June 2022 rose 22 cents to C$107.12.

Oil Plunges
Crude-oil futures fell 2.4 percent in New York after tumbling as much as 4.4 percent, the largest intraday decline since June 21. The commodity, Canada’s biggest export, dropped more than $3 in less than a minute as October contracts were close to expiring.

The Standard & Poor’s 500 Index (SPX) dipped 0.3 percent after falling as much as 0.6 percent.

The Federal Reserve Bank of New York’s general economic index dropped to minus 10.41, the lowest since April 2009, from minus 5.85 in August. The median forecast of 53 economists in a Bloomberg survey called for minus 2. Readings less than zero signal contraction in the so-called Empire State Index that covers New York, northern New Jersey and southern Connecticut.

The New York data “just adds more fuel to the fire that there’s a general slowdown in the manufacturing sector and more broadly in the U.S. economy,” Mazen Issa, Canada macro strategist at the securities unit of Toronto-Dominion Bank (TD) in Toronto, said in a phone interview.

Home Sales
The sale of homes fell 5.8 percent in August to 35,869, from 38,063 in July, the Canadian Real Estate Association said in a statement posted on its website. Home sales were down 8.9 percent from the same month last year. The average national price for existing homes rose 1.1 percent from July and 0.3 percent from a year earlier.

Bonds of Canadian banks, ranked the soundest for five straight years by the Geneva-based World Economic Forum, are the worst performers this year versus their global peers as slowing consumer lending cuts into profit growth.

The U.S. dollar-denominated debt of lenders including Royal Bank of Canada and Bank of Montreal has returned 4 percent, compared with an average increase of 12 percent for the Bank of America Merrill Lynch U.S. Corporates, Banks Index.

Foreigners increased their holdings of Canadian securities in July, led by purchases of government bonds. The net purchase of C$6.67 billion ($6.87 billion) in July followed the revised net sale of C$7.76 billion in June, Statistics Canada said today in Ottawa. Bond investment by foreigners rose by C$6.10 billion, led by secondary market purchases of federal and provincial bonds.

To contact the reporter on this story: Katia Dmitrieva in New York at [email protected]

To contact the editor responsible for this story: Dave Liedtka at [email protected]

 

[Muthukali]

Euro Remains Lower Against Yen Before Europe, China PMIs
By Masaki Kondo and Monami Yui - Sep 19, 2012 9:11 AM GMT+0800

The euro remained lower against the yen following ahead of a report tomorrow that economists say will show services and manufacturing industries shrank in the currency bloc for an eighth month.

The 17-nation euro slid from a near four-month high versus the dollar before Spain auctions bonds tomorrow as the country considers seeking a bailout. The yen snapped a three-day drop before the Bank of Japan concludes a policy meeting today.

“The euro is likely to weaken in the long term,” said Marito Ueda, senior managing director in Tokyo at FX Prime Corp. (8711), a currency-margin company. “The economic outlook is bleak in Europe.”

The euro lost 0.2 percent to 102.60 yen as of 9:58 a.m. in Tokyo from the close in New York yesterday, when it declined 0.4 percent. The common currency was at $1.3042 after falling 0.6 percent in the past two days to $1.3048. It reached $1.3172 on Sept. 17, the strongest since May 4. The yen rose 0.2 percent to 78.67 per dollar following a three-day, 1.7 percent drop.

A euro-zone composite index for services and manufacturing industries was at 46.6 in September, little changed from 46.3 the prior month, according to the median estimate of economists surveyed by Bloomberg News. London-based Markit Economics will release the figure that’s based on a poll of purchasing managers in the industries tomorrow. A reading below 50 indicates contraction.

Spanish Auctions
Spain, the fourth-largest economy in the currency bloc, will auction 3- and 10-year bonds tomorrow. The nation’s benchmark 10-year bond yield has fallen to 5.9 percent from the euro-era record of 7.75 percent on July 25 since the European Central Bank unveiled an unlimited bond-purchase program on Sept. 6 aimed at lowering government borrowing costs.

The country will consider seeking a bailout if the conditions imposed are acceptable, Deputy Prime Minister Soraya Saenz de Santamaria said yesterday, the strongest signal from the government that it’s positioning to reach for the financial lifeline.

The Bank of Japan (8301) will announce further monetary easing today, five of the 21 economists surveyed by Bloomberg forecast. The central bank increased the size of a fund to buy assets such as government debt by 5 trillion yen ($64 billion) to 45 trillion yen in July.

Concern that risks to the economy are growing may prompt the central bank to take action at its meeting today, rather than wait until next month, the Nikkei reported, without citing anyone.

“With dollar-yen having moved higher in recent days, the risk is that the BOJ underwhelms in its policy measures today,” Emma Lawson, a Sydney-based currency strategist at National Australia Bank Ltd., wrote in a research note. “Combined with the broader lowering of yields, this could see dollar-yen move back below 78.”

To contact the reporters on this story: Masaki Kondo in Singapore at [email protected]; Monami Yui in Tokyo at [email protected]

To contact the editor responsible for this story: Rocky Swift at [email protected]

 

[Muthukali]

Kiwi Rises Versus Peers After GDP Data; Aussie Weakens
By Kristine Aquino - Sep 20, 2012 11:18 AM GMT+0800

Australia’s currency weakened versus its major peers after a gauge signaled Chinese manufacturing may contract for an 11th month, clouding prospects for the South Pacific nation’s resource exports.

Demand for the so-called Aussie was also damped before data today that may show factory output and services in the 17-nation euro region shrank. New Zealand’s dollar, known as the kiwi, was supported after government figures showed the nation’s second- quarter growth exceeded economist estimates.

“The market was probably expecting a bit more of a bounce” in the Chinese data, said Emma Lawson, a Sydney-based currency strategist at National Australia Bank Ltd. “The Aussie is a little bit lower. There’s just a little bit of disappointment there.”

The Aussie lost 0.5 percent to $1.0432 as of 1:07 p.m. in Sydney. It bought 81.68 yen, 0.6 percent below its close in New York. The kiwi was little changed at 82.68 U.S. cents after earlier jumping as much as 0.4 percent. It slid 0.1 percent to 64.75 yen.

A preliminary reading released today showed a gauge by Markit Economics and HSBC Holdings Plc for manufacturing in China was 47.8 this month from 47.6 in August. The index is based on a poll of purchasing managers in the industry. China is Australia’s largest trading partner and New Zealand’s second- biggest export destination.

“I can see the currency moving a little lower as people are concerned about the Chinese economy,” Matthew Lifson, a foreign exchange trader at Cambridge Mercantile Group, said on Bloomberg Television today. The Aussie may end the year at $1.0150, he said.

Chinese Manufacturing
A separate euro-zone composite index for manufacturing and services was probably at 46.6 this month, little changed from 46.3 in August, according to the median estimate of economists surveyed by Bloomberg News. Markit will also release the figure today. For both measures, a reading below 50 indicates contraction.

Australia’s dollar fell 3 percent in the past month, the worst performance among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. New Zealand’s dollar lost 0.4 percent.

The so-called kiwi gained earlier against the U.S. dollar and Japanese yen after Statistics New Zealand said in a report gross domestic product rose 2.6 percent in the three months ended June from a year earlier, the fastest pace in two years.

The GDP report “is a genuine upside surprise,” said Imre Speizer, a strategist in Auckland at Westpac Banking Corp. (WBC), Australia’s second-largest lender. “I think we’ll have some reverberation throughout the day for the currency.”

New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, gained half a basis point to 2.715 percent. Australia’s 10-year yield declined eight basis points to 3.27 percent.

To contact the reporter on this story: Kristine Aquino in Singapore at [email protected]

To contact the editor responsible for this story: Rocky Swift at [email protected]

 

[Muthukali]

Bonds advance, baht weakens

Published: 20/09/2012 at 11:10 AM
Online news:

Thailand's three-year government bonds advanced and the baht retreated from near a five-month high before data that economists predict will show declining overseas sales.

Exports fell 5.9% in August, the biggest slide this year, after a drop of 4.5% in July, according to the median estimate of analysts in a Bloomberg survey before a government report due Sept 24 or Sept 25. International investors pumped US$658 million into sovereign notes this week through yesterday, according to data from the Thai Bond Market Association. Three-year debt from the Southeast Asian nation yielded 2.87 percentage points more than Treasuries.

"Exports are a concern amid weak global demand," said Tsutomu Soma, manager of the investment trust and fixed-income business unit at Rakuten Securities Inc in Tokyo. "Bonds in Asia will probably receive a lot of funds due to their relative safety and higher yields."

The yield on the 3.625% bonds due May 2015 dropped one basis point, or 0.01 percentage point, to 3.22% as of 8.34am in Bangkok, according to data compiled by Bloomberg.

The baht lost 0.1% to 30.82 per dollar, according to data compiled by Bloomberg. The currency touched 30.66 on Sept 17, the strongest level since March 27. One-month implied volatility, a measure of exchange-rate swings used to price options, was unchanged at 4.27%.

Export growth this year may be lower than previously forecast, according to minutes of the Bank of Thailand's Sept 5 meeting released on Wednesday. The central bank's Monetary Policy Committee voted three to two to maintain the benchmark interest rate at 3% on that day, with two members absent, they showed.

 

[Muthukali]

Aussie Dollar Gains Fed Support, Euro Crisis Progress
By Kristine Aquino - Sep 21, 2012 9:32 AM GMT+0800

Australia’s dollar rose versus most major peers on prospects the U.S. Federal Reserve will support growth and Europe is progressing towards a resolution to its debt crisis, boosting demand for higher-yielding assets.

The so-called Aussie gained against its U.S. and Japanese counterparts after Minneapolis Fed President Narayana Kocherlakota said the central bank should hold rates at around zero until unemployment drops below 5.5 percent and the Financial Times said European Union authorities are discussing a new rescue for Spain. Australia’s currency headed for a weekly decline, while New Zealand’s dollar was little changed, after an International Monetary Fund official said the organization will cut its forecasts for the world economy.

“We’re getting much closer to a formal Spanish bailout and that kind of reduces some of the tail risk associated with the European outlook,” said Jonathan Cavenagh, a Singapore-based currency strategist at Westpac Banking Corp. (WBC) Kocherlakota’s comments “have clearly helped sentiment as well. That’s definitely going to be supporting the Aussie in the near-term,” he said.

The Australian dollar rose 0.1 percent to $1.0451 at 11:29 a.m. in Sydney. It bought 81.90 yen, 0.3 percent higher than yesterday’s close. Its New Zealand counterpart, nicknamed the kiwi, was little changed at 82.93 U.S. cents and gained 0.2 percent to 64.99 yen.

The Aussie has fallen 1 percent against its U.S. peer this week, the most since the five days ended Aug. 17. New Zealand’s kiwi dollar was little changed since Sept. 14 after gaining 2 percent in the previous period.

Australia’s 10-year note yield rose four basis points to 3.27 percent. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, added two basis points to 2.72 percent.

In a speech in Sydney today, Australian Treasurer Wayne Swan said China’s economic slowdown has been engineered by the nation’s leaders, who are able to adjust policies to alleviate a severe downturn. China is Australia’s largest trading partner and New Zealand’s second-biggest export destination.

To contact the reporter on this story: Kristine Aquino in Singapore at [email protected]

To contact the editor responsible for this story: Rocky Swift at [email protected]

 

[Muthukali]

Aussie Debacle Signaling China Hard Landing as Iron Market Melts
By Anchalee Worrachate and Monami Yui - Sep 24, 2012 3:42 AM GMT+0800

From the end of 2008 through July, no major currency appreciated as much as Australia’s dollar, thanks to booming shipments of iron ore and other commodities to China. Since then, it’s the worst performer as the engine of world growth slows.

The so-called Aussie depreciated 2.5 percent in the past month, the biggest decline among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. Traders are betting Australia’s central bank will cut interest rates to boost growth, dragging down the currency even though the Standard & Poor’s GSCI Index of commodities has risen almost 20 percent from its low this year in June.

This reversal shows the dangers for an economy tied too closely to another. China, which buys 28 percent of Australia’s exports, said industrial output grew at the slowest pace in three years last month as Europe’s debt crisis cut sales of Chinese goods. Polls show Prime Minister Julia Gillard’s governing Labor Party is under pressure before elections due next year.

“The Australian dollar is very expensive from whichever metrics you look at,” Dagmar Dvorak, a director of fixed-income and currencies in London at Baring Asset Management, which manages $50 billion, said in an interview on Sept. 20. “When a currency overvaluation is that extreme, you have to question what could be a trigger that stops it. For the Aussie, it’s the economic slowdown in China and falling commodity prices. The currency looks vulnerable.”

Rebound Curtailed
Baring has joined Credit Suisse Asset Management and Quantum Global Investment Management as onetime bulls turned bearish. The Australian dollar was 39 percent overvalued against its U.S. counterpart on Sept. 20 as measured by the Organization for Economic Cooperation and Development. That’s more than other currencies that tend to rise and fall with commodity prices, such as those of New Zealand and Canada.

The Aussie rose to its highest level against the U.S. dollar in about six months on Sept. 14, after the Federal Reserve announced a third round of bond buying designed to boost growth and reduce unemployment. The gain was short-lived, and the currency has since weakened against 12 of its 16 major counterparts. Australia’s currency fell 0.9 percent last week to $1.0458 as a report on Sept. 20 showed China’s manufacturing may contract for the 11th straight month and an International Monetary Fund official said the same day it would cut its forecasts for global economic expansion.

Resource Boom
“We are worried about Chinese growth and think the short- term risk for Australian dollar is a bit too high for us,” Gareth Fielding, the chief executive officer at Quantum Global Investment Management in Zug, Switzerland, said on Sept. 17. “The rally has come a long way. We are a buyer if it falls below parity with the dollar.”

Australia’s economy was bolstered by the biggest resources bonanza since a gold rush in the 1850s as Chinese-led demand for iron ore, coal and natural gas surged in part because of Beijing’s 4 trillion yuan ($634 billion) stimulus package in 2008. Iron ore from Australia went into everything from skyscrapers in Shanghai to a shipyard in Dalian.

The Aussie rode the boom, advancing 49 percent against the dollar since Dec. 31, 2008, and 60 percent versus the euro. Exports to China more than doubled to A$71.5 billion last year from A$32.3 billion in 2008, according to data from the Department of Foreign Affairs and Trade.

Most Expensive
This rally made the Australian currency the most expensive among developed-nation currencies, based on the relative costs of goods and services as measured by the Paris-based OECD. The Canadian loonie and the New Zealand kiwi were each 21 percent overvalued versus the dollar using the same measure.

It also made it attractive to as many as 23 central banks from Brazil to Russia, according to data provided by the Reserve Bank of Australia under a Freedom of Information Act request by Bloomberg News. The share of global foreign-exchange reserves dominated in “other currencies,” which strategists said includes Australia’s dollar, rose to 5.2 percent in the first quarter, from 2 percent in 2007, according to the IMF.

“We suspect that there will be very heavy buyers of Aussie” over the long term, Todd Elmer, a currency strategist at Citigroup Inc. in Singapore, said in a phone interview on Sept. 11. “It makes enormous sense as a currency, in part because of commodities, in part because of higher returns, in part because of Australia’s more stable fiscal positions, than most major economies.”

Iron Woes
RBA Governor Glenn Stevens predicted last month that the resource boom has at least another year to run before it begins to ease. Business investment accounted for about 17 percent of Australia’s gross domestic product in the first half of 2012 and is forecast to increase further in the next year, driven by mining projects, according to an RBA report.

Investors are showing concern that Australia’s economy may slow after the price of iron ore, which made up more than 20 percent of exports last year, dropped as much as 37 percent this year to the lowest level since October 2009.

Fortescue Metals Group Ltd. (FMG), Australia’s third-biggest producer, cut its spending plans by 26 percent as iron-ore prices declined.

BHP Billiton Ltd (BHP), the world’s largest miner, delayed work at the Olympic Dam copper-uranium-gold project in South Australia last month, joining companies including Xstrata Plc and Rio Tinto Group in scaling back expansion.

China Slows
“For Australia, the best news is behind us,” Adrian Owens, a money manager at GAM in London, said in a phone interview on Sept. 19. “China is struggling. In the short-run, there’s been a few minor tweaks in terms of stimulus but that may not reverse a trend of slower growth.”

GAM, a unit of GAM Holding AG with $48 billion under management, is buying the Mexican peso, Owens said.

Barclays Plc, Morgan Stanley, Royal Bank of Scotland Group Plc and UBS AG forecast growth of 7.5 percent for China this year, the weakest since 1990. Pacific Investment Management Co. (PTTRX), which runs the world’s biggest bond fund, predicts a slowdown to 6.5 percent to 7 percent in the next 12 months.

China’s net exports and investment have “reached their limits,” Ramin Toloui, Pimco’s co-head of emerging markets portfolio management in Singapore, said in a Sept. 13 e-mail.

Australia’s economy grew 0.6 percent in the second quarter from the prior three months, according to a Bureau of Statistics report on Sept. 5, slower than the median estimate of economists for a 0.7 percent gain. Home-loan approvals unexpectedly fell in July by the most in five months.

‘Stretched’ Valuation
“We are cautious” at these price levels for Australia’s dollar, Stefan Keitel, Credit Suisse Asset Management’s global chief investment officer, said in a Sept. 3 phone interview.

The firm has sold Australian government bonds and is waiting for a “better entry level” as the currency’s valuation is “stretched” after a prolonged rally, he said.

The Aussie is trading about 30 cents higher than its average since exchange controls were scrapped in 1983. The RBA said Sept. 18 that it saw the strength of the local currency and slowing growth in China as risks to the domestic economy, signaling scope to cut interest rates.

After lowering the benchmark overnight cash-rate target by a total of 1.25 percentage points from October in an effort to boost growth, Stevens and his board left it at 3.5 percent for the past three meetings since June.

Rate Outlook
Traders see about an 84 percent chance policy makers will cut the benchmark cash rate by 25 basis points on Oct. 2, and a 97.3 percent likelihood of a reduction by year-end, interest- rate swaps show. Lower borrowing costs may make the currency less attractive to investors as they reduce returns on fixed- income assets.

“We’ve been seeing mining companies pulling back capital expenditure and iron-ore prices are still much lower than last year’s highs,” Mansoor Mohi-uddin, the global head of currency strategy at UBS AG in Singapore, said on Sept. 19. “The currency could definitely go below parity if the markets get more concerned about further easing.”

Gillard, the country’s first female prime minister, has seen her party’s poll ratings trail the opposition since after Australia’s 2010 election. She has pledged to return the nation’s budget to surplus after four years of deficits by curbing outlays and adding taxes.

‘Pillar’ Crumbles
The budget-surplus plan will reduce public spending and curb growth, said Yoshisada Ishide, who oversees $14 billion at Daiwa SB Investments Ltd. in Tokyo, said in a telephone interview on Sept. 13. Ishide manages the biggest mutual fund focused on Australian dollar-denominated debt.

“The resource sector is one of the major pillars of Australia’s economy, and markets are cautious that demand for commodity exports will slow more evidently, which is negative for the economy,” Ishide said. He forecasts the currency will finish 2012 at parity to the U.S. dollar.

Standard Chartered Plc revised down its end-2013 forecast for the Australian dollar on Sept. 4, after having been jointly the second-most bullish forecaster in a Bloomberg survey of analysts as of July 1. It now predicts the Aussie will fall to 95 U.S. cents by the end of 2013 from a previous projection of $1.07.

“The Australian economy and its currency look vulnerable because of its exposure to China,” Peter Redward, a principal of Auckland, New Zealand-based Redward Associates Ltd. and former head of emerging-markets currency strategy at Deutsche Bank AG, said in an interview on Sept. 13. “We have yet to see the full impact on export values from the sharp fall in coal and iron ore prices. When it hits, the economy will slow, the central bank will cut rates and the Australian dollar will fall.”

To contact the reporters on this story: Anchalee Worrachate in London at [email protected]; Monami Yui in Tokyo at [email protected]

To contact the editors responsible for this story: Paul Dobson at [email protected]; Rocky Swift at [email protected]

 

[Muthukali]

Euro Near Week Low Versus Dollar Before Sentiment Report
By Kristine Aquino and Monami Yui - Sep 25, 2012 10:32 AM GMT+0800

The euro was 0.4 percent from its lowest in more than a week before reports that may show Europe’s debt crisis is hurting sentiment in the region.

The 17-nation euro failed to rally after a five-day drop against the yen before data forecast to show French business confidence worsened. Other reports due today may show consumer sentiment in Germany and Italy stagnated. The yen was less than 0.1 percent from a one-week high versus the dollar as Asian stocks were little changed after declining yesterday, spurring demand for Japan’s currency as a refuge.

“We’ve got no signs of a pickup or improvement in the euro zone,” said Ray Attrill, Sydney-based global co-head of currency strategy at National Australia Bank Ltd. “Sentiment is probably going to keep the euro a little bit heavy.”

The euro was at $1.2947 at 11:24 a.m. in Tokyo from $1.2931 yesterday, when it dropped to as low as $1.2891, the least since Sept. 13. It bought 100.78 yen from 100.67. The yen fetched 77.84 per dollar after reaching 77.81 yesterday, the strongest since Sept. 14.

The MSCI Asia Pacific Index of equities was little changed after falling 0.3 percent yesterday. The Standard & Poor’s 500 Index (SPX) dropped 0.2 percent in New York. The Stoxx Europe 600 Index slid 0.4 percent.

Discord has widened over how to stem Europe’s fiscal woes, with disagreement on the establishment of a banking union, Spain’s indecision on whether it needs a full rescue and discussions in Greece on how to meet bailout commitments.

Losing Urgency
Michael Meister, finance spokesman for German Chancellor Angela Merkel’s Christian Democratic Union, said yesterday Spanish Prime Minister Mariano Rajoy must stop prevaricating. European Union President Herman Van Rompuy warned against “losing the sense of urgency” in fighting the crisis three years after it erupted in Greece, speaking in a video posted on his website yesterday.

French industrial confidence probably fell to 89 this month from 90 in August, according to the median estimate of economists surveyed by Bloomberg News before the national statistics office Insee releases the report today. That would match the figure reached in July, which was the lowest since February 2010.

Data due for publication today by market research company GfK SE (GFK) will probably say consumer sentiment in Germany will be unchanged at 5.9 in October, the median forecast in a separate poll showed. Confidence in Italy is estimated to remain at 86 this month, according the median projection of economists in another survey.

Second Worst
The euro dropped 3.3 percent in the past six months, the worst performance after the Swiss franc among the 10 developed- nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen was the biggest gainer, rising 5.9 percent. The dollar lost 0.6 percent.

Japan is preparing to appoint the country’s fifth finance minister in three years after Prime Minister Yoshihiko Noda yesterday named current Finance Minister Jun Azumi acting secretary-general of the ruling Democratic Party of Japan. Azumi will keep his post for the time being, Noda said.

Azumi told reporters today speculation that a change his ministry’s leadership will lead to a vacancy in currency policy is mistaken. The yen may become volatile, but over the mid- to long-term, the Bank of Japan (8301)’s easing will have an effect on the currency, Azumi said.

Japan’s central bank unexpectedly increased its asset- purchase fund to 55 trillion yen ($707 billion) at its meeting last week.

To contact the reporters on this story: Kristine Aquino in Singapore at [email protected]; Monami Yui in Tokyo at [email protected]

To contact the editor responsible for this story: Rocky Swift at [email protected]

 

[Muthukali]

Euro Near 2-Week Low as Protests Add to Crisis Concerns
By Mariko Ishikawa - Sep 27, 2012 8:59 AM GMT+0800

The euro traded 0.3 percent from a two-week low against the dollar as protests against European austerity measures added to obstacles for leaders seeking to stem the region’s debt crisis.

The 17-nation currency is poised for an eighth daily drop against the yen, the longest since May, before Spanish Prime Minister Mariano Rajoy submits a fifth package of budget cuts. Demonstrators gathered near parliament in Madrid yesterday, while Greek police in Athens dispersed protesters with tear gas. Australia’s dollar was near a three-week low against the yen as global stocks fell, reducing demand for riskier assets.

“When you see austerity protests going on across Europe, that concerns the broader market and it certainly will make investors more cautious of taking a long euro position,” said Thomas Averill, managing director in Sydney at Rochford Capital, a currency and interest-rate risk management company.

A long is a bet that an asset will rise, and Averill expects euro will weaken to $1.26 in the next 10 days.

The euro traded at $1.2875 as of 9:35 a.m. in Tokyo from $1.2873 yesterday, when it touched $1.2835, the lowest since Sept. 12. The shared currency rose 0.1 percent to 100 yen. It has lost 3.1 percent since Sept. 17 against Japan’s currency, and is set for the longest stretch of declines since the eight days ended May 31.

The yen gained 0.1 percent to 77.67 per dollar. The Australian dollar slid 0.1 percent to 80.52 yen from yesterday, when it dropped to 80.23, the weakest since Sept. 6. The so- called Aussie was little changed at $1.0367.

Early Elections
The MSCI Asia Pacific Index (MXAP) of stocks slid 0.1 percent, following a 1.3 percent decline in the MSCI World Index yesterday.

Spanish bonds dropped yesterday, sending the yields on 10- year securities above 6 percent for the first time since Sept. 18. Catalan President Artur Mas called early elections for Nov. 25, as Rajoy struggles to gain acceptance for austerity measures and faces criticism from European leaders for delaying a decision on a bailout to support the nation’s bond market.

The euro has weakened 3.2 percent in 2012, the worst performance after the yen among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar has weakened 2.5 percent.

The yen rose against its most-traded counterparts on speculation central banks around the world will struggle to revive growth, spurring demand for safer assets.

The European Central Bank on Sept. 6 agreed to an unlimited bond-buying program aimed at regaining control of interest rates in struggling nations such as Spain and Italy. Italy will auction up to 7 billion euros ($9 billion) of bonds maturing in 2017 and 2022 today.

Confidence Index
A final reading of consumer confidence index in the euro area probably dropped to minus 25.9 this month, the lowest since May 2009, according to economists surveyed by Bloomberg News before the data due today.

The Federal Reserve said Sept. 13 it will buy $40 billion of mortgage-backed securities each month in a third round of quantitative easing, or QE, that aims to spur economic growth through low borrowing costs.

“The equity market is starting to realize that QE is not a panacea,” said Rochford’s Averill. “There’s probably another sizable spike in risk aversion due between now and the end of the year.”

Bank of Japan (8301) board member Takehiro Sato said the central bank may consider buying foreign bonds to weaken the yen, the Mainichi reported. The central bank on Sept. 19 expanded its asset purchase fund by 10 trillion yen ($129 billion) to 55 trillion yen.

Citigroup Inc. reduced its underweight position on the yen and an overweight bet on Swedish krona.

The yen “remains undeterred by the BOJ’s recent expansion of the asset-purchases program,” Citigroup’s Group-of-10 currency strategy team led by Steven Englander, wrote in a note to clients yesterday. “We expect continued JPY strengthening if market sentiments remain weak.”

To contact the reporter on this story: Mariko Ishikawa in Tokyo at [email protected]

To contact the editor responsible for this story: Rocky Swift at [email protected]

 

[Muthukali]

Australia Bonds Gain on Europe Concern; Currency Near 2-Week Low
By Monami Yui - Sep 27, 2012 9:43 AM GMT+0800

Australia’s government bonds gained, sending the 10-year benchmark yield below 3 percent for the first time since July, as signs Europe’s debt crisis is deepening boosted investor demand for refuge assets.

The Australian dollar traded 0.6 percent from a two-week low before Spanish Prime Minister Mariano Rajoy submits a fifth package of budget cuts. Demonstrators gathered near parliament in Madrid yesterday, while Greek police dispersed protesters in Athens with tear gas. New Zealand’s dollar was supported after data showed the nation’s business outlook improved this month.

Australia’s bonds are being bought “partly because of safety bids,” said Joseph Capurso, a strategist at Commonwealth Bank of Australia (CBA) in Sydney. “The Spanish government is going to have their budget and there is a good chance that Greece is going to come back to the fore. They might prevent the Aussie from lifting.”

Yields on Australia’s 10-year notes dropped as much as eight basis points, or 0.08 percentage point, to 2.98 percent, the lowest level since July 27. As of 11:23 a.m. in Sydney, the rate was 3.03 percent.

The so-called Aussie dollar traded at $1.0386, from $1.0371 yesterday, when it touched $1.0329, the weakest since Sept. 11. It was little changed at 80.63 yen. The New Zealand dollar, nicknamed the kiwi, fetched 82.55 U.S. cents from 82.42. It was little changed at 64.11 yen.

Spanish bonds dropped yesterday, sending 10-year yields above 6 percent for the first time since Sept. 18. Catalan President Artur Mas called early elections for Nov. 25, as Rajoy struggles to gain acceptance for austerity measures and faces criticism from European leaders for delaying a decision on an international bailout to support the nation’s bond market.

ANZ National Bank Ltd. said a net 29.3 percent of New Zealand companies polled expect their own activity will improve in the next 12 months, up from 26.4 percent in August and the highest level since May, citing results of its survey.

To contact the reporter on this story: Monami Yui in Tokyo at [email protected]

To contact the editor responsible for this story: Rocky Swift at [email protected]

 

[Muthukali]

Euro Falls Versus Dollar as U.S. Economic Data Trails
By Joseph Ciolli - Sep 29, 2012 5:23 AM GMT+0800

The euro fell against the dollar after U.S. purchasing managers data and consumer sentiment trailed forecasts, crimping demand for riskier assets.

The shared currency pared declines after a stress test showed Spanish banks have a combined capital shortfall of 59.3 billion euros ($76.3 billion), less than earlier estimates amid speculation a financial bailout will be sought. The U.S. currency strengthened versus most of its 16 major counterparts after the Institute for Supply Management-Chicago Inc. said its business barometer fell for the first time in three years, signaling contraction. China’s yuan rose to the strongest versus the dollar since 1993.

“I’m skeptical the Spanish stress test results will be able to alleviate concerns about global growth,” Joe Manimbo, a market analyst in Washington at Western Union Business Solutions, a unit of Western Union Co (WU), said in a telephone interview. “But it can keep some firepower available for the bloc’s rescue fund, which can be viewed as a positive for the single currency.”

The 17-nation fell 0.4 percent to $1.2860 at 5 p.m. New York time, after gaining as much as 0.4 percent. It was little changed against the yen at 100.21. The dollar added 0.5 percent to 77.96 yen.

Futures Bets
Futures traders decreased aggregate bets the dollar would fall against eight major currencies. Net-bets for a dollar decline were 50,238 in the week ended Sept. 25, down from 73.482 the previous week, according to Commodity Futures Trading Commission data compiled by Bloomberg.

The euro has weakened 3.4 percent this year, the second worst performance after the yen among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar is down 2.6 percent.

“Weak economic data is weighing on the stock market, triggering a risk-off environment, and the euro is getting hit,” Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. in New York, said in a telephone interview. “It’s not just a euro move. It’s a broad-based decline.”

The yen’s share of global foreign-exchange reserves rose from March through June to the highest level since the third quarter of 2005, International Monetary Fund data show. The euro’s portion of reserves rebounded from a more than five-year low, rising to 25.1 percent from 24.9 percent. The percentage of reserves denominated in dollars fell to 61.9 percent from 62.1 percent.

Kiwi Leads
The New Zealand dollar led all major currencies this month against the greenback, appreciating 3.3 percent. The Brazilian real increased the least out of 16 counterparts versus the dollar, gaining 0.2 percent.

Swedish’s krona appreciated more than all of its peers versus the dollar this quarter, gaining 5.4 percent. The South African rand had the biggest quarterly decline out of its peers, slipping 1.8 percent.

The real has lost 7.9 percent versus the dollar in 2012, almost three times the decline of the rand, the second-biggest loser. The Mexican peso leads all 16 of the dollar’s biggest peers with a gain of 8.4 percent this year.

Implied volatility, which signals the expected pace of currency swings, for the currencies of Group of Seven nations reached 7.73, its lowest level since October 2007, according to a JPMorgan Chase & Co. index. Lower volatility makes investments in currencies with higher benchmark lending rates more attractive because the risk in such trades is that market moves will erase profit.

Pound Falls
The British pound fell today versus the majority of its 16 major counterparts after Fitch Ratings said that government debt will peak at a higher level and later than it previously predicted, increasing its risk of a downgrade.

Sterling depreciated 0.4 percent to $1.6167 after earlier falling 0.8 percent, its biggest decline since Aug. 1. The pound was little changed at 79.55 pence per euro.

The Dollar Index (DXY), which tracks the greenback against the currencies of six U.S. trading partners, added 0.4 percent 79.894.

The Institute for Supply Management-Chicago’s business barometer fell 49.7 this month from 53 in August. A reading of 50 is the dividing line between expansion and contraction. The median estimate of 57 economists surveyed by Bloomberg forecast the gauge would fall to 52.8.

The Thomson Reuters/University of Michigan final sentiment index rose to 78.3 this month from 74.3 in August. Economists projected 79 for the measure after a preliminary September reading of 79.2, according to the Bloomberg survey median.

Economic Risks
“The ugly results are serving to drive down risk even further as investors are looking for the safe-haven shelter of the U.S. dollar,” Neal Gilbert, a market strategist at GFT Markets, wrote today in a note to clients.

The yuan strengthened on speculation the nation will step up efforts to halt a slowdown in the world’s second-largest economy. The monetary authority injected a record amount of funds into the financial system this week to ease a cash squeeze in the run up to a week-long holiday that starts Oct. 1.

“Funds are flowing back into the market as people bet China will soon act more aggressively to revive growth,” said Kenix Lai, a Hong Kong-based foreign-exchange analyst at Bank of East Asia Ltd. (23)

The yuan rose as much as 0.3 percent to 6.2840 per dollar. China’s currency, which has strengthened 1.1 percent this quarter, can trade as much as 1 percent on either side of the central bank’s daily fixing.

Spain’s Plan
Spain commissioned the independent stress test as part of the conditions agreed in July for a European bailout of as much as 100 billion euros for its banking system, which has been saddled with more than 180 billion euros of losses linked to souring real estate assets. The total capital deficit is less than the 62 billion euros management consultants Oliver Wyman estimated in June that banks would need.

The attempt to show how its banks would bear an extreme scenario in which the economy would shrink for three years in a row is part of the government’s drive to show it is fixing Spain’s economy as it considers whether to seek a further rescue package from Europe.

To contact the reporter on this story: Joseph Ciolli in New York at [email protected]

To contact the editor responsible for this story: Dave Liedtka at [email protected]

 

[Muthukali]

Euro Trades Near Three-Week Low Before Retail Sales, ECB Meeting
By Monami Yui and Kristine Aquino - Oct 2, 2012 9:07 AM GMT+0800

The euro traded 0.7 percent from its lowest level in three weeks amid signs that Europe’s economy is worsening as its debt crisis remains unresolved.

The 17-nation euro halted a three day advance against the yen before data forecast to show retail sales in the currency bloc decreased for a second month and ahead of an Oct. 4 meeting of the European Central Bank. Australia’s dollar was near a three-week low before Reserve Bank policy makers decide on interest rates today. Demand for the U.S. currency was limited after Federal Reserve Chairman Ben S. Bernanke said the bank will sustain monetary stimulus which tends to debase it.

“News out of Europe is certainly not going to get a huge amount better overnight,” said Thomas Averill, managing director in Sydney at Rochford Capital, a currency and interest- rate risk management company. “The debt crisis is far from over. We’ve got some more bad headlines to come out of there, which will push euro-dollar lower.”

The euro was at $1.2892 as of 9:38 a.m. in Tokyo, little changed from yesterday, when it touched $1.2804, the lowest since Sept. 11. The currency bought 100.64 yen from 100.52, after rising 0.4 percent over the past three days. The dollar fetched 78.04 yen from 77.99 yen.

Retail Sales
European retail sales probably fell 0.1 percent in August from July, when they slipped 0.2 percent, according to the median estimate of economists in a Bloomberg News survey taken before the European Union’s statistics office releases the data tomorrow. Figures yesterday showed that showed unemployment in the euro area climbed to a record 11.4 percent in August.

The Frankfurt-based ECB will keep its main refinancing rate unchanged at a record low of 0.75 percent this week and will reduce it by the end of the year, a separate Bloomberg poll of economists showed.

Spain’s Economy Minister Luis de Guindos said the nation is pressing on with its analysis of whether to seek a bailout, moving beyond his call last week that the EU needed to provide more guidance on conditions. Following a meeting with Economic and Monetary Affairs Commissioner Olli Rehn in Madrid yesterday, De Guindos said Spain is now studying the ECB bond-buying proposal.

Bailout Prospects
The move in Spain comes as European leaders enter a month that may decide the success of the central bank’s bid to end the debt crisis by pledging bond purchases. Spanish Prime Minister Mariano Rajoy, who spent six months campaigning for ECB President Mario Draghi to buy bonds, has been weighing the benefits of seeking aid since Aug. 2.

The euro lost 3.1 percent over the past six months, the biggest drop after the Swiss franc among 10 developed-nation currencies tracked by Bloomberg Correlation Weighted Indexes. The dollar rose 0.5 percent, and the yen jumped 6.3 percent.

In Australia, traders are pricing in an about an 80 percent chance the Reserve Bank will cut its overnight cash-rate target by a quarter percentage point to 3.25 percent today, swaps data compiled by Bloomberg show. That conflicts with 19 of 28 economists surveyed by Bloomberg who say Governor Glenn Stevens will leave borrowing costs unchanged.

The so-called Aussie traded at $1.0364 from $1.0361, after reaching $1.0326 in New York, the weakest since Sept. 11.

Bernanke said the Fed will sustain record stimulus even after the expansion gains strength, and policy makers don’t expect the economy to remain weak through 2015. He gave a speech yesterday in Indianapolis.

Fed Stimulus
The U.S. central bank announced Sept. 13 it would buy $40 billion of mortgage-backed debt a month until the economic recovery is well-established. The U.S. jobless rate has been stuck above 8 percent for 43 straight months.

The Dollar Index (DXY), which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six U.S. trading partners, was little changed at 79.803 today. The gauge climbed to 80.147 yesterday, the highest since Sept. 11.

“I think the dollar’s just going to continue to seesaw to a certain extent,” Rochford’s Averill said. “Economic concerns globally are keeping it relatively strong, but continued printing by the Fed is keeping it weak.”

To contact the reporters on this story: Monami Yui in Tokyo at [email protected]; Kristine Aquino in Singapore at [email protected]

To contact the editor responsible for this story: Rocky Swift at [email protected]

 

[Muthukali]

U.S. dollar down in early Taipei trading
Central News Agency
2012-10-02 09:48 AM

Taipei, Oct. 2 (CNA) The U.S. dollar was traded at NT$29.308 at 9:30 a.m. Tuesday on the Taipei Foreign Exchange, down NT$0.094 from Monday's close. (By Y.F. Low)

 

[Muthukali]

Euro Near 3-Week Low Before Retail Report, ECB Meeting
By Kristine Aquino and Monami Yui - Oct 3, 2012 9:54 AM GMT+0800

The euro was 0.8 percent from a three-week low as signs of economic weakness in Europe add pressure on central bank policy makers meeting this week to consider fresh easing steps.

The 17-nation euro slid versus its major peers before data that may show retail sales in the region had the first consecutive monthly drop this year. European Central Bank and Bank of England officials are due to meet tomorrow. The pound held losses against the common currency before figures forecast to show U.K. services expanded at a slower pace. The yen dropped against the dollar with Bank of Japan (8301) also preparing for a two- day meeting. Australia’s dollar sank after data showed the nation’s trade deficit was wider than forecast.

“The European economy looks worse than expected,” said Hitoshi Asaoka, a senior strategist at Mizuho Trust & Banking Co. in Tokyo. “Investors are reluctant to keep buying the euro after it reached $1.30,” Asaoka said, referring to a level last seen on Sept. 24.

The euro was at $1.2905 at 10:47 a.m. in Tokyo from $1.2920 yesterday. It touched $1.2804 on Oct. 1, the lowest since Sept. 11. Europe’s shared currency traded at 100.91 yen from 100.97 yesterday, when it completed a 0.9 percent four-day gain. The yen fetched 78.20 per dollar, 0.1 percent below the close in New York. The pound was at 80.02 pence per euro from 80.09 yesterday, when it lost 0.2 percent.

Retail sales in the euro area probably declined 0.1 percent in August from July when they fell 0.2 percent, according to the median estimate of economists surveyed by Bloomberg News before the European Union’s statistics office releases the data today. That would be the first back-to-back drop since the period ended December 2011.

ECB Meets
ECB officials meet tomorrow in Frankfurt, where they are expected to keep the bank’s benchmark interest rate unchanged at a record-low 0.75 percent, a Bloomberg poll shows. ECB President Mario Draghi unveiled a program of unlimited bond purchases last month to ease borrowing costs for debt-ridden nations.

UBS AG Chairman and former ECB Governing Council member Axel Weber said yesterday in Moscow that the euro region’s festering debt crisis will “continue to linger” as the central bank fails to ease market disquiet and volatility.

The euro weakened 4.9 percent in the 12 months, according to Bloomberg Correlation Weighted Indexes. The yen declined the most among the 10 developed-nation currencies tracked by the gauge, falling 6.8 percent in the period. The dollar lost 3.1 percent.

BOJ Bets
The yen held a three-day decline against the dollar before the BOJ begins its policy meeting tomorrow. Officials expanded the central bank’s asset-purchase program last month in a bid to stimulate growth and achieve a 1 percent inflation goal.

Japan’s new Economy Minister Seiji Maehara this week pledged a closer watch over the BOJ to ensure it meets its target for consumer prices, adding that purchases of foreign bonds may be a powerful tool for easing.

In the U.K., a gauge of services based on a survey of purchasing managers was at 53 last month after climbing to 53.7 in August, the median projection in a Bloomberg survey showed before Markit Economics and the Chartered Institute of Purchasing and Supply publish the report today.

The BOE will probably keep its target for bond purchases at 375 billion pounds ($605 billion) at their meeting tomorrow, all 40 economists said in a separate Bloomberg poll.

Government data in Australia today showed the nation’s August trade deficit was three times the median economist estimate. The so-called Aussie sank 0.4 percent to $1.0227.

To contact the reporters on this story: Kristine Aquino in Singapore at [email protected]; Monami Yui in Tokyo at [email protected]

To contact the editor responsible for this story: Rocky Swift at [email protected]

 

[Muthukali]

Yen Holds Losses Versus Major Peers Before BOJ Decision
By Monami Yui and Masaki Kondo - Oct 4, 2012 10:50 AM GMT+0800

The yen remained lower against all 16 major counterparts before the Bank of Japan (8301) begins a two-day policy meeting today after expanding stimulus last month.

The euro was 0.9 percent from a three-week low versus the dollar before Spain sells bonds as investors weigh whether the debt-saddled nation will ask for an international bailout. European Central Bank policy makers convene today to discuss ways to contain fiscal turmoil in the region. The Australian dollar slid to a four-week low after data showed the nation’s retail sales rose by less than economists had expected.

“In a situation where stock prices fall and dollar-yen declines, I expect the BOJ to bolster aggressive monetary easing,” said Kengo Suzuki, a currency strategist in Tokyo at Mizuho Securities, a unit of Japan’s third-largest bank by market value. “Such a move would keep the yen in check.”

The Japanese currency slid 0.2 percent to 78.65 per dollar as of 11:41 a.m. in Tokyo after touching 78.66, the weakest since Sept. 19. It dropped 0.3 percent to 101.60 per euro, set for a sixth-straight decline. The 17-nation euro fetched $1.2922 from $1.2905. The currency reached $1.2804 on Oct. 1, the lowest since Sept. 11.

The BOJ increased its asset-purchase program by 10 trillion yen ($127 billion) to 55 trillion yen at the previous meeting on Sept. 19, saying the economy’s pick-up was slowing while prices were flat.

Data over the past week have added to the case that the BOJ will need to expand stimulus to boost growth and achieve its 1 percent inflation goal. Consumer prices in August matched the steepest decline in 16 months and the nation’s biggest manufacturers grew more pessimistic last quarter.

Spanish Auctions
Spain is scheduled to sell notes maturing in 2014, 2015 and 2017 today. Prime Minister Mariano Rajoy this week denied that he has immediate plans to ask for a bailout, damping expectations that a request was imminent.

“The markets are disappointed that Spain may not seek aid soon,” said Kazuo Shirai, a trader at Union Bank NA in Los Angeles. “That’s leading to a little bit of euro selling.”

The ECB is projected to keep its benchmark interest rate unchanged at a record-low 0.75 percent today, a Bloomberg News survey shows. ECB President Mario Draghi unveiled a program of unlimited bond purchases last month to ease borrowing costs for debt-ridden nations, spurring a rally in the shared currency.

The euro strengthened 1.9 percent in the past month, the best performance after New Zealand’s dollar among the 10 developed-nation currencies tracked by Bloomberg Correlation- Weighted Indexes. The yen declined 1.5 percent and the dollar lost 1.2 percent.

BOE Meeting
In the U.K., the Bank of England will probably leave its asset-purchase target at 375 billion pounds ($603 billion) at its monthly policy meeting today, according to all 40 economist forecasts compiled by Bloomberg. It will also leave its main interest rate at a record-low 0.5 percent, according to all 50 estimates in a separate survey.

The pound was little changed at 80.30 pence per euro. It fetched $1.6091 from $1.6076 yesterday.

Demand for the dollar was limited before the Federal Reserve today publishes minutes of its Sept. 13 meeting, when it announced a third round of so-called quantitative easing that tends to debase the currency. The central bank will continue record stimulus even after economic expansion gains strength, Chairman Ben S. Bernanke said this week.

Jobless Rate
A Labor Department report tomorrow will show the nation’s unemployment rate probably rose to 8.2 percent in September from 8.1 percent the prior month, economists in a Bloomberg survey forecast. The jobless rate has been stuck above 8 percent since February 2009.

U.S. nonfarm payrolls increased by 115,000 jobs last month, compared with a monthly average of 139,000 in the first eight months of the year, another poll showed. Data from ADP Employer Services showed private payrolls increased by 162,000 last month, more than economists estimated.

The Fed minutes “may provide a bit of insight as to whether the Fed discussed the continuation of asset purchases at year-end,” Mary Nicola, a New York-based currency strategist at BNP Paribas SA, wrote in a note to clients yesterday. “This could drive the dollar lower as the market starts to see that outright Treasury purchases are in the pipeline.”

Retail sales in Australia advanced 0.2 percent in August from the previous month, when they dropped 0.8 percent, the statistics bureau said today in Sydney. Economists had forecast a 0.4 percent increase.

Australia’s currency touched $1.0182, the lowest since Sept. 6, before trading at $1.0205, 0.1 percent lower than the close yesterday.

With assistance from Mika Otsuka in New York. Editors: Rocky Swift, Jonathan Annells

To contact the reporters on this story: Monami Yui in Tokyo at [email protected]; Masaki Kondo in Singapore at [email protected].

To contact the editor responsible for this story: Rocky Swift at [email protected]

 

[Muthukali]

Dollar Advances Versus Yen as Jobless Rate Unexpectedly Falls
By Joseph Ciolli - Oct 5, 2012 8:56 PM GMT+0800

The dollar rose versus the yen after the U.S. unemployment rate unexpectedly dropped in September to the lowest level since January 2009, prompting speculation the Federal Reserve won’t expand its third round of bond-buying under the quantitative easing stimulus strategy.

The greenback was little changed against the euro. Minutes of the Fed’s last meeting released yesterday showed policy makers said they could change the size of their latest debt purchases in response to economic developments.

“The fact that the unemployment rate is moving lower will have an impact on the length and size of this new QE program from the Fed,” Eric Viloria, senior currency strategist for Gain Capital Group LLC in New York, said in a telephone interview. “The unemployment rate moving lower, faster, is going to reduce expectations that the Fed is going to need to print more dollars.”

The greenback climbed 0.5 percent to 78.87 yen at 8:54 a.m. in New York. The U.S. currency was little changed against the euro at $1.3018. The Dollar Index (DXY) was little changed at 79.342.

The jobless rate slid from 8.1 percent and hourly earnings climbed more than forecast. The economy added 114,000 workers last month after a revised 142,000 gain in August that was more than initially estimated, Labor Department figures showed today in Washington.

The Dollar Index slid to its lowest in more than three months on Sept. 7, 80.151, after the government’s last employment report showed payrolls expanded by fewer jobs than forecast.

‘Sustained Improvement’
Six days later, after their September meeting, Fed policy makers said the central bank would buy $40 billion a month of mortgage bonds until they see what Chairman Ben S. Bernanke described as an “ongoing, sustained improvement in the labor market.” They also said the federal-funds rate will probably stay at virtually zero at least through mid-2015.

The Fed previously purchased $2.3 trillion of assets in two rounds of easing to spur economic growth.

Bernanke, in a speech in August, called the U.S. jobs picture a “grave concern.” The unemployment rate has been stuck above 8 percent since February 2009, and the economy has recovered only about 4.1 million of the 8.8 million jobs lost in the wake of the 18-month recession that ended in June 2009.

The greenback fell yesterday against most major currencies as Labor Department data showed applications for jobless benefits increased less than forecast, spurring risk appetite. Claims rose 4,000 to 367,000 in the week ended Sept. 29, versus a Bloomberg News survey forecast of 370,000.

Fed policy makers said they saw manageable risks in the new round of bond buying they began last month, according to minutes released yesterday of the Federal Open Market Committee’s September gathering in Washington.

“Most participants thought these risks could be managed since the committee could make adjustments to its purchases, as needed, in response to economic developments or to changes in its assessment of their efficacy and costs,” the minutes said.

To contact the reporter on this story: Joseph Ciolli in New York at [email protected]

To contact the editor responsible for this story: Dave Liedtka at [email protected]

 

[Muthukali]

U.S. dollar closes lower on Taipei forex (update)
Central News Agency
2012-10-05 05:53 PM

Taipei, Oct. 5 (CNA) The U.S. dollar fell against the Taiwan dollar Friday, shedding NT$0.02 to close at NT$29.368 as further intervention by Taiwan's central bank helped the greenback recoup most of its earlier losses by the end of the session, dealers said. The central bank's moves demonstrated that it hopes to keep the U.S. dollar above the NT$29.30 mark against the Taiwan dollar in a market awash with liquidity supporting the local currency, they said. The U.S. unit opened at the day's high of NT$29.390 and then moved to an early low of NT$29.210 before rebounding. Turnover totaled US$841 million during the trading session. Before the central bank stepped in, the U.S. dollar had fallen sharply against the Taiwan dollar as traders took cues from a rising euro, dealers said. The strength of the euro, which hit a two-month high against the U.S. dollar in New York overnight, reflected eased concerns over the debt problems in the eurozone after the European Central Bank (ECB) reiterated it will preserve the common currency, dealers said. After the latest policymaking meeting held Thursday, ECB President Mario Draghi said his bank is ready to buy government bonds from debt-ridden countries in the region whenever they ask the bank to do so.

Draghi repeated at a news conference that the euro is "irreversible," an attempt to show the ECB's determination to take on the financial crisis in the eurozone and mitigate fears over the demise of the currency, dealers said. The latest ECB commitment gave a boost to most currencies in Asia, including the Taiwan dollar, as traders in the region were betting the regional currencies will trend higher in the near future as the impact of Europe's debt problems fade, they said. Market sentiment was tempered, however, by a worse-than-expected report on the number of people who filed for unemployment benefits for the first time in the United States, dealers said. Many traders were anxiously waiting for the release of U.S. jobs data for September due later Friday, they said. (By Kao Chao-fen and Frances Huang)

 

[Muthukali]

Euro Weakens With Asian Stocks as Aussie Touches Low
By Glenys Sim and Masaki Kondo - Oct 8, 2012 8:32 AM GMT+0800

The euro weakened against most major peers and Asian stocks fell before European finance ministers meet today. The Australian dollar touched a three-month low as oil and copper declined.

The euro slipped 0.2 percent to $1.3009 and 102.37 yen at 9:18 a.m. in Tokyo. The Aussie dropped to $1.0150, the lowest since July 13. Oil was down 0.4 percent at $89.52 a barrel while copper declined 0.9 percent. The MSCI Asia Pacific Excluding Japan Index lost 0.2 percent and futures on the Standard & Poor’s 500 Index were little changed. Japanese markets are shut for a holiday and the U.S. is observing Columbus Day.

European finance ministers will meet in Luxembourg today, while German Chancellor Angela Merkel visits Greece tomorrow for the first time since the crisis erupted. German data today may show industrial production and exports fell. Alcoa Inc. (AA) unofficially starts the U.S. earnings season with the release of its third-quarter numbers tomorrow, the fifth anniversary of the record highs in the S&P 500 and Dow Jones Industrial Average.

“The headlines from Europe are probably going to get worse over the course of next three to four months,” said Thomas Averill, managing director in Sydney at Rochford Capital, a currency and interest-rate risk management company. Europe’s economic fundamentals are “lackluster.”

China’s markets reopen today after a weeklong break. The Bloomberg China-US Equity Index of the most-traded Chinese shares in the U.S. advanced 1.2 percent last week, led by consumer stocks on a jump in holiday spending. China’s major attractions saw an average 23 percent increase in tourism sales from a year ago during the first six days of the so-called Golden Week holiday, industry regulator data showed.

To contact the reporters on this story: Glenys Sim in Singapore at [email protected]; Masaki Kondo in Singapore at [email protected]

To contact the editor responsible for this story: James Poole at [email protected]