Currencies

[evisionary]

Singapore practices currency manipulation, letting it increase to combat high inflation as imports get EXPENSIVE.

Singapore to slow currency rise as recession risk mounts

Singapore's central bank is expected to ease monetary policy next week by slowing the local dollar's pace of appreciation, according to a Reuters poll, amid signs the economy likely slipped into a recession in the third quarter.

The Singapore dollar, the world's 12th most-traded currency, has gained around 5.7 percent so far this year, helped by rising foreign investment in Singapore assets that are seen as a safe haven amid the turmoil in global financial markets.

The currency's strength has, however, increased pressure on manufacturers already reeling from weak global orders, and most forecasters predict the Singapore economy shrank sequentially in the third quarter following a 0.7 percent seasonally adjusted and annualised contraction in April-June.

Meanwhile, inflation remains high by historical standards, even though the pace of price increase slowed to a nearly two-year low in August, forcing the Monetary Authority of Singapore (MAS) to find a balance between stimulating the economy and keeping cost pressures in check.

"We expect the MAS to maintain a preference for a strong Singapore dollar at the October policy meeting, but at a slower appreciation pace than what the current policy setting allows for, as the economy is likely to slip into a technical recession," Macquarie said in a note to clients.

Macquarie is one of the 17 forecasters polled by Reuters that expect MAS to ease policy. Four others, HSBC, ING, Nomura and Royal Bank of Scotland, predicted the central bank will stand pat, given still-strong inflationary pressures.

"The economy remains at the risk of persistent high inflation fuelled by imported l ow short-term interest rates from the US. Inflation has been on the high side among Asian countries and we expect that MAS will look through the activity slowdown and maintain the current policy," said ING economist Prakash Sakpal.

Singapore manages monetary policy by letting its dollar rise or fall against the currencies of its main trading partners within an undisclosed trading band. At its April policy announcement, MAS reiterated its bias for a "modest and gradual appreciation" of the Singapore dollar and increased the slope of the policy band slightly, indicating it will let the currency appreciate at a faster pace to help lower inflation expectations.

The central bank also narrowed the policy band, indicating it will allow less fluctuations in the local currency. MAS had, in previous recessions, let the Singapore dollar fall in value by re-centering the exchange rate policy band downwards -- the equivalent of a one-off depreciation -- and adopting a zero percent appreciation path.

INTERVENTION

The Singapore dollar was traded around 1.229 per U.S. dollar early on Monday. Analysts say it has been at the top end of the policy band for most of the past few months, even hitting the upper end of the band several times.

MAS has been intervening to keep the Singapore dollar within the policy band, traders said, with the aim of not only keeping the currency within prescribed limits but also putting a floor under interbank rates, which are linked to Singapore dollar forwards.

 

[Muthukali]

Euro Remains Lower After IMF Cuts Europe’s 2013 Forecast
By Masaki Kondo and Monami Yui - Oct 9, 2012 10:17 AM GMT+0800

The euro remained lower following a decline yesterday as the International Monetary Fund cut its growth forecast for the currency bloc and European leaders struggle to contain the region’s debt crisis.

The shared currency maintained a drop against the yen before data from Italy tomorrow that economists say will show the nation’s industrial production dropped by the most in more than two years. German Chancellor Angela Merkel visits Greece today for the first time since the crisis began in 2009.

“The euro is struggling to strengthen,” said Kengo Suzuki, a currency strategist in Tokyo at Mizuho Securities Co., a unit of Japan’s third-largest bank by market value. “The economic outlook is not bright in Europe.”

The euro was at $1.2982 as of 11:15 a.m. in Tokyo after losing 0.6 percent yesterday in New York to $1.2968. It bought 101.66 yen from 101.58 following a 1 percent drop, the biggest slide on a closing basis since July 20. The dollar was little changed at 78.31 yen.

The 17-country euro area economy will expand 0.2 percent in 2013, down from the projection of 0.7 percent three months ago, the Washington-based IMF said in its World Economic Outlook report today. The region’s economy will contract 0.4 percent this year, the fund forecast.

The world economy will grow 3.3 percent this year, the slowest pace since the 2009 recession and compared with the July forecast of 3.5 percent, the IMF said. The risk of a serious global slowdown is “alarmingly high,” the fund said.

Italy’s Production
Industrial production in Italy dropped 9.7 percent in August from a year earlier, according to the median estimate of economists in a Bloomberg News survey. That would be the biggest decline since October 2009. Italy is the euro area’s third- largest economy.

Finance ministers from all 27 nations in the European Union will convene in Luxembourg today. Ministers from the euro bloc yesterday declared the 500 billion-euro ($649 billion) European Stability Mechanism operational, while saying that Spain, the permanent rescue fund’s biggest potential near-term customer, isn’t on the verge of tapping it.

Greece, where the European debt crisis began, needs to find spending cuts to maintain access to 240 billion euros in rescue funds and is trying to reach an agreement with its official lenders to release the next payment of 31 billion euros. Luxembourg Prime Minister Jean-Claude Juncker told reporters yesterday he is “impressed” with the Greek government’s performance.

Trade Ranges
“The key focus will be on Spain and Greece and, while we expect positive progress to be made on both accounts, we do not expect that the event will provide headlines that deliver a major catalyst for the market,” Michael Sneyd, a currency strategist at BNP Paribas SA in London, wrote in an e-mailed note yesterday, saying of meetings of European financial chiefs. The euro-dollar may not “move substantially on the back of this week’s events and short-term investors are likely to continue to trade the ranges,” he wrote.

The world’s most-accurate foreign-exchange strategists say the dollar will strengthen even as the Federal Reserve debases it, unlike the previous two rounds of economic stimulus, when cash injections weakened the currency.

Fed Chairman Ben S. Bernanke’s $40 billion-a-month of bond purchases will leave a stronger currency in 2013, say nine of the 10 forecasters with the lowest margins of error in the six quarters ended Sept. 28 as measured by Bloomberg. Wells Fargo & Co. and Westpac Banking Corp., which tied for most-accurate, expect little damage from efforts to stimulate the economy and the so-called fiscal cliff of spending cuts and tax increases scheduled for next year.

Dollar Index
While the Dollar Index (DXY), which measures the currency against those of six major trading partners, fell 4.6 percent and 3.9 percent in the first two rounds of Fed stimulus that added $2.3 trillion to the banking system, this time will be different, forecasters say. Investors will demand the world’s reserve currency as U.S. growth outpaces its developed counterparts.

“If the U.S. economy keeps outperforming, then it shouldn’t cause the U.S. dollar much damage,” given that most of its trading partners are growing slowly or contracting, said Sean Callow, a senior currency strategist in Sydney at Westpac Banking Corp. Monetary easing is only “a short-term negative for the U.S. dollar.”

Westpac, which matched Wells Fargo with a 3.34 percent margin of error in the Bloomberg analysis, expects the dollar to rally to $1.20 versus the euro by the third quarter of next year, from $1.3045 at the end of last week, and advance to 80 yen from 78.67. The Dollar Index was little changed at 79.545 today.

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]

Aussie Dollar Falls, Ends 2-Day Gain Before Unemployment
By Kristine Aquino - Oct 10, 2012 8:23 AM GMT+0800

Australia’s dollar fell, reversing a two-day gain, before data tomorrow that may show the unemployment rate climbed to the highest in three months.

The so-called Aussie slid versus the yen on speculation the Reserve Bank of Australia will lower interest rates next month to help spur growth in the labor market. Demand for the South Pacific nation’s currency was supported after prices for iron ore, Australia’s biggest export, surged to a two-month high.

“The basic outlook is that employment growth remains weak,” said Greg Gibbs, a senior currency strategist at Royal Bank of Scotland Group Plc in Singapore. “There are reasons to be more downbeat on the Aussie in the near term.”

The Australian dollar lost 0.2 percent to $1.0187 at 11:21 a.m. in Sydney after rising 0.2 percent in the previous two days. It fell 0.2 percent to 79.69 yen. New Zealand’s currency, nicknamed the kiwi, dropped 0.3 percent to 81.52 U.S. cents. It bought 63.76 yen, 0.4 percent lower than the close in New York.

Australia’s 10-year yield was little changed at 3.06 percent. New Zealand’s swap rate, a fixed payment made to receive floating rates, fell two basis points to 2.61 percent.

The jobless rate in Australia probably rose to 5.3 percent in September from 5.1 percent in the previous month, according to the median estimate of economists surveyed by Bloomberg News before the statistics bureau releases the report tomorrow. If confirmed, that would be the highest since June.

Interest-rate swaps data compiled by Bloomberg show traders see an 81 percent chance the RBA will lower its overnight cash rate target by 25 basis points to 3 percent at a meeting on Nov. 6, up from 79 percent odds seen on Oct. 3, the day after the central bank’s last policy meeting.

Physical iron ore with 62 percent content at the Chinese port of Tianjin jumped 6.2 percent yesterday to $117.20 a ton, the highest close since Aug. 1, according to The Steel Index Ltd. China is Australia’s biggest trading partner.

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]

Australian Dollar Advances as Job Gains Exceed Forecasts
By Kristine Aquino - Oct 11, 2012 9:14 AM GMT+0800

Australia’s dollar rose after a report showed more people found work last month than predicted.

The so-called Aussie climbed versus most of its major counterparts, even after the jobless rate rose to the highest level since 2010. Demand for the Australian currency and its New Zealand counterpart was tempered after Standard & Poor’s lowered Spain’s credit rating to one level above junk, adding to concern the euro area’s debt crisis is deepening.

“The fact that we still have jobs created, particularly in the full-time sector, should limit the fallout for the Aussie,” said Jonathan Cavenagh, a Singapore-based currency strategist at Westpac Banking Corp. (WBC) “But given that the unemployment rate is trending higher, we’d still want to be selling into rallies in the currency.”

The Australian dollar rose 0.2 percent to $1.0257 as of 12:14 p.m. in Sydney. It earlier touched $1.0266, the strongest since Oct. 5. The New Zealand dollar bought 81.62 U.S. cents from 81.63 yesterday.

The yield on Australia’s 10-year note was at 3.05 percent after earlier declining as much as eight basis points, or 0.08 percentage point, to 3 percent. New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, was little changed at 2.625 percent.

The number of people employed in Australia rose by 14,500 in September, the statistics bureau said in Sydney today. That compares with the median estimate for an increase of 5,000 in a Bloomberg News survey of economists. The jobless rate rose to 5.4 percent, the highest since April 2010, from 5.1 percent as more people sought employment.

S&P announced in a statement yesterday its decision to cut Spain’s credit score two levels to BBB-. The ratings company assigned a negative outlook to the nation’s long-term rating and said there were “significant risks to Spain’s economic growth and budgetary performance.”

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]

 

[Yanzi]

Thanks Bro Muthukali for this thread and updates. They are very informative.

 

[Muthukali]

Yen Weakens Versus Peers on Signs of U.S. Stability
By Monami Yui and Mariko Ishikawa - Oct 12, 2012 9:04 AM GMT+0800

The yen declined against its major counterparts as signs that the U.S. economy is stabilizing curbed demand for safer assets.

Japan’s currency fell versus the euro for a second day before data today forecast to show confidence among U.S. consumers hovered near the highest since May. A report yesterday showed applications for jobless benefits fell to the fewest since February 2008. The euro headed for a weekly drop before figures that economists said will show industrial production in the currency bloc decreased. Singapore’s dollar rose after the central bank kept its monetary policy unchanged.

“There are certainly some signs of improvement in terms of U.S. data,” said Robert Rennie, chief currency strategist at Westpac Banking Corp. (WBC) in Sydney. “Market sentiment is pretty stable at the moment.”

The yen slid 0.2 percent to at 78.49 per dollar as of 9:47 a.m. in Tokyo from 78.34 yesterday, when it lost 0.2 percent. It dropped 0.3 percent to 101.59 per euro, after sliding 0.6 percent to 101.27 in New York. The 17-nation euro was little changed at $1.2942, set for a 0.8 percent decline this week.

The MSCI Asia Pacific Index of shares rallied 0.4 percent today. The MSCI World Index (MXWO) of developed-nation shares gained 0.3 percent yesterday, snapping a three-day decline.

The Thomson Reuters/University of Michigan preliminary sentiment index was probably 78.0 in October, little changed from 78.3 in September, the highest since May, according to the median forecast of economists in a Bloomberg News survey before the data today. Labor Department figures yesterday showed applications for jobless benefits in the world’s largest economy decreased 30,000 to total 339,000 in the week ended Oct. 6, the fewest in more than four years.

Yen Performance
The yen touched 77.95 per dollar yesterday, the strongest level since Oct. 1. The Japanese currency appreciated 3.6 percent over the past six months, the best performance among the 10 developed-nation currencies tracked by Bloomberg Correlation- Weighted Indexes. The euro fell 1.9 percent and the dollar rose 0.2 percent in the same period.

Japan’s Finance Minister Koriki Jojima said yesterday he told his Group-of-Seven counterparts that the strength of the yen is hurting the nation’s economy and that countries should cooperate on foreign exchange if necessary. A stronger yen makes Japanese products pricier overseas and erodes domestic exporters’ earnings when repatriated.

Industrial output in the 17-nation euro area may have fallen 0.4 percent in August from the prior month, when it gained a revised 0.5 percent, a separate Bloomberg poll of economists showed. The European Union’s statistics office is scheduled to release the figures today.

Spain Downgrade
Standard & Poor’s this week downgraded Spain to BBB-, one level above junk, adding to pressure on the debt-saddled nation’s government to seek assistance. The move would make it possible for the European Central Bank to buy Spain’s bonds to contain borrowing costs under a new program to stem the region’s debt crisis.

Spanish 10-year bond yields were 5.76 percent yesterday. They have dropped from the euro-era record of 7.75 percent reached in July to as low as 5.55 percent since ECB President Mario Draghi said the central bank is ready to do “whatever it takes” to preserve the euro.

While the ECB unveiled an unlimited debt-purchase program on Sept. 6, Spain’s Prime Minister Mariano Rajoy has held off on a decision about whether to request aid, a condition the ECB insists on. EU leaders will hold a two-day summit in Brussels starting Oct. 18.

Hasten Bailout
“There is some buying of the euro as investors speculated the S&P downgrade may hasten Spain’s request for a bailout,” said Noriaki Murao, New York-based managing director of the marketing group at the Bank of Tokyo-Mitsubishi UFJ Ltd., a unit of Japan’s biggest financial group by market value. “The markets will be watching if any progress is made at the EU summit on both the Spanish and Greek situations.”

Singapore’s central bank unexpectedly announced it will leave monetary policy unchanged, seeking to curb consumer price gains even after the economy shrank an annualized 1.5 percent in the last quarter.

The Singapore dollar rose 0.5 percent to S$1.2220 versus its U.S. counterpart. It has advanced 6.1 percent this year, the best performance after the Mexican peso among the greenback’s 16 major counterparts.

To contact the reporters on this story: Monami Yui in Tokyo at [email protected]; Mariko Ishikawa in Tokyo at [email protected].

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

 

[Muthukali]

Aussie Is Near 2-Week High on Stock Gains; Bonds Decline
By Monami Yui - Oct 18, 2012 12:11 PM GMT+0800

The Australian dollar touched the strongest level in two weeks after Chinese data showed signs of stabilization in the economy, brightening the export outlook for the South Pacific nation.

Australia’s government bonds dropped for a third day after reports showed China’s economy grew in line with economists’ forecasts in the third quarter while industrial production, retail sales and fixed-asset investment increased more than expected in September. The Australian and New Zealand currencies gained versus the yen as Asian stocks advanced, boosting demand for riskier assets.

“The data flow from China was slightly better than expectations,” said Khoon Goh, a senior currency strategist in Singapore at Australia & New Zealand Banking Group Ltd. (ANZ) “We might see perhaps a little bit more upside in the Aussie as concerns around a China slowdown start to ease off a little.”

The Australian currency reached $1.0397, the strongest since Oct. 1, before trading at $1.0388 at 2:50 p.m. in Sydney. It added 0.3 percent to 82.20 yen. New Zealand’s dollar, nicknamed the kiwi, was little changed at 82.17 U.S. cents and climbed 0.3 percent to 65.03 yen.

The MSCI Asia Pacific Index of shares rose 0.8 percent.

Australian 10-year bond yields climbed 11 basis points, or 0.11 percentage point, to 3.23 percent. The rates earlier touched 3.24 percent, the most since Sept. 24.

China Economy
China’s gross domestic product expanded 7.4 percent during the third quarter from a year earlier, the National Bureau of Statistics said in Beijing today. That matched the median estimate in a Bloomberg News survey of 43 economists and compared with a previously reported 7.6 percent expansion in the second quarter.

A separate report showed industrial production increased 9.2 percent in September from a year earlier. Economists surveyed by Bloomberg forecast a 9 percent gain, based on the median estimate. Retail sales advanced 14.2 percent and fixed- asset investment excluding rural households rose 20.5 percent last month, with both topping economists’ projections, according to data also released today.

Chinese Premier Wen Jiabao said before the GDP report that the country’s economic situation last quarter was “relatively good.”

“China’s economic growth has started to stabilize,” the official Xinhua News Agency said yesterday, citing Wen’s comments in meetings he held with industry leaders, company executives and local government officials on Oct. 12-15. The government is confident of achieving annual targets and the economy will continue to show “positive changes,” Wen said, according to Xinhua.

Demand for Australia’s dollar was limited after a private report showed the nation’s business confidence hovered near the lowest level in a year.

The National Australia Bank Ltd. confidence index increased to minus 2 in the third-quarter from a revised minus 3 in the April-June period. The gauge of current conditions rose to 1 from minus 2, it showed.

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]

U.S. dollar down in early Taipei trading
Central News Agency
2012-10-18 09:58 AM

Taipei, Oct. 18 (CNA) The U.S. dollar was traded at NT$29.213 at 9:30 a.m. Thursday on the Taipei Foreign Exchange, down NT$0.033 from Wednesday's close. (By Y.F. Low)

 

[Muthukali]

Aussie Set for Weekly Gain on Signs of Improving Economy
By Monami Yui - Oct 19, 2012 1:37 PM GMT+0800

Australia’s dollar headed for its biggest weekly gain in more than a month as signs of improvement in the global economy supported demand for riskier investments.

The so-called Aussie traded 0.4 percent from its strongest in three weeks before data today forecast to show U.S. sales of existing homes hovered near a two-year high. Figures yesterday showed gains in China’s industrial production, retail sales and fixed-asset investment. The appeal of the Australian and New Zealand currencies was also supported after Pacific Investment Management Co., manager of the world’s biggest bond fund, said it has boosted holdings in the South Pacific nations’ assets.

“Recent data have been easing pessimism over growth in the U.S. and China, supporting the Aussie,” said Kumiko Gervaise, an analyst at Gaitame.com Research Institute Ltd. in Tokyo. “There is a risk that the Australian dollar has gained too much in a short period of time.”

Australia’s currency was little changed at $1.0365 as of 4:20 p.m. in Sydney from the close yesterday, when it reached $1.0412, the highest since Sept. 28. It has appreciated 1.3 percent this week. The Aussie bought 82.25 yen from 82.17. It touched 82.52 yesterday, the strongest since Sept. 19.

The Australian dollar’s 10-day relative strength index versus its Japanese counterpart was at 64.6, nearing the 70 level that some traders see as an indication that an asset may retreat after rising too quickly. The equivalent gauge against the greenback held at 58.4.

New Zealand’s dollar, nicknamed the kiwi, fetched 82 U.S. cents, 0.2 percent higher than yesterday’s close.

U.S. Housing
U.S. purchases of previously owned houses slid 1.7 percent to a 4.74 million annual rate in September, after they increased to the most since May 2010 in the previous month, according to the median forecast of economists in a Bloomberg News survey. The National Association of Realtors will release the figures today. A separate report due Oct. 24 is expected to show a 2.7 percent gain in new home sales in September.

Chinese data released yesterday showed industrial production increased 9.2 percent in September from a year earlier, retail sales advanced 14.2 percent and fixed-asset investment excluding rural households rose 20.5 percent in the first three quarters. China’s gross domestic product expanded 7.4 percent during the third quarter from a year earlier.

The nation is Australia’s largest trading partner and New Zealand’s second-biggest export market.

Australian 10-year bond yields dropped four basis points, or 0.04 percentage point, to 3.19 percent. The rates yesterday touched 3.24 percent, the most since Sept. 24. The MSCI Asia Pacific Index of regional shares dropped 0.3 percent today, paring this week’s gain to 2.2 percent.

Pimco Buying
Decisions in larger developed economies to keep policy rates close to zero and engage in currency market intervention have helped push the Australian and New Zealand dollars higher, according to Scott Mather, head of global portfolio management at Pimco, which oversees $1.8 trillion in assets. The Newport Beach, California-based company’s holdings in the region are at the highest levels “in a very long time,” he said at a briefing in Auckland.

“Rates will continue to fall in this region, in Australia and New Zealand,” Mather said in a conference call. “It’s partially the reflection of weak global growth and partially in response to an abnormal amount of currency strength relative to what history would tell you we should have.”

The Reserve Bank of Australia has the highest benchmark rate among major developed economies, even after reducing it by 1.5 percentage points over the past year to 3.25 percent. The Reserve Bank of New Zealand’s key rate is a record-low 2.5 percent. Higher yields, safe-haven flows and buoyant global commodities demand have helped push the South Pacific currencies above their 20-year averages.

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]

Asian Currencies Gain in Week on Recovery Optimism; Rupee Drops
By Kyoungwha Kim - Oct 19, 2012 4:34 PM GMT+0800

South Korea’s won led a weekly advance in Asian currencies as signs of an improvement in the global economy brightened the outlook for the region’s exports and spurred demand for emerging-market assets.

The Bloomberg-JPMorgan Asia Dollar Index, which tracks the region’s most-active currencies, rose 0.2 percent this week and touched 117.87 yesterday, the highest level since February. The won completed its best week of the month and the yuan had an 11th week of gains, the longest winning streak since March 2008. India’s rupee fell for a second week as the government reported this year’s fastest inflation.

China’s factory production, retail sales and fixed-asset investment accelerated in September, data showed yesterday. Retail sales in the U.S., the world’s biggest economy, increased 1.1 percent in September while housing starts climbed 15 percent to a four-year high, reports showed this week. Europ’s leaders committed to their goal of creating a euro-area bank supervisor by year-end, according to officials at a European Union summit in Brussels ending today.

“The September data was clearly stronger than expected,” said Nizam Idris, head of Asian fixed income and foreign- exchange at Macquarie Bank Ltd. in Singapore. “The growth momentum will continue. Still, we are at a very early stage of the recovery so it’s too soon to expect” faster gains in Asian currencies including the yuan.

The won appreciated 0.7 percent this week to 1,103.45 per dollar in Seoul, according to data compiled by Bloomberg. The yuan rose 0.22 percent from Oct. 12 to 6.2535 after touching a 19-year high of 6.2446 yesterday. Taiwan’s dollar climbed 0.3 percent from a week ago to NT$29.286.

‘Positive Data’
The won touched 1,102.50 on Oct. 17, the strongest level since 0ct. 31, 2011. South Korea’s economy probably expanded 1.7 percent in the third quarter from a year earlier, the least in three years, a Bloomberg survey showed before data next week.

“The won was strong this week on positive data from the U.S., but it seems some overseas investors are covering their short positions on the dollar,” said Lee Jung Hyun, a Seoul- based currency trader for Industrial Bank of Korea. (024110) A short position is a bet an asset will decline in value.

China Outlook
The yuan has extended its rebound from this year’s low of 6.3967 on July 25 to 2.3 percent after data pointed to an improvement in the world’s second-largest economy. Factory output grew 9.2 percent from a year ago, compared with an 8.9 percent gain in August that was the smallest in three years, official figures showed yesterday. Retail sales advanced 14.2 percent, the most since March, while fixed-asset investment climbed 21 percent in the first three quarters.

“We believe China’s economy has bottomed out in August or September,” said Tommy Ong, a Hong Kong-based senior vice- president of treasury and markets at DBS Bank (Hong Kong) Ltd. “Improvement in global liquidity and calls for more appreciation from the U.S. presidential campaign trail are also supporting the yuan.”

The rupee lost 1.9 percent from Oct. 12 to close at 53.835 per dollar amid concern faster inflation will erode returns from local assets. India’s benchmark price index jumped 7.81 percent last month from a year earlier, the most since December, according to figures released Oct. 15.

Elsewhere, the Malaysian ringgit rose 0.2 percent this week to 3.0495 per dollar. Indonesia’s rupiah fell 0.1 percent to 9,595 from last week’s 9,588, prices from local banks compiled by Bloomberg show. The currency reached 9,657 on Oct. 11, the weakest level since October 2009. The Philippines peso appreciated 0.1 percent to 41.385. Vietnam’s dong climbed 0.1 percent from a week ago to 20,843.

To contact the reporter on this story: Kyoungwha Kim in Singapore at [email protected]

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

 

[Muthukali]

Euro Weakens as Rajoy Says Spain Not Under Aid Pressure
By Joseph Ciolli - Oct 20, 2012 5:09 AM GMT+0800

The euro declined for a second day against the dollar after Spanish Prime Minister Mariano Rajoy said his nation doesn’t feel under any pressure to ask for a bailout, fueling concern the debt crisis will be prolonged.

The 17-nation currency dropped for the first time in seven days versus the yen on speculation this week’s European Union summit in Brussels will fail to provide clarity on potential financial aid for Spain. The pound gained against the euro after the U.K. budget deficit narrowed. Canada’s dollar weakened to an eight-week low against its U.S. counterpart after September consumer prices data trailed forecasts.

“Up until recently, we had been getting some indications from Europe of a more conciliatory tone from officials with regards to Spain,” Carl Forcheski, a director on the corporate currency sales desk at Societe Generale SA in New York, said in a telephone interview. “But concerns still remain. The worries of October are still out there.”

The euro fell 0.3 percent to $1.3024 at 5 p.m. in New York time after dropping 0.4 percent yesterday. The shared currency depreciated 0.3 percent to 103.28 yen. The yen was little changed at 79.32 per dollar.

Rand, Kiwi
South Africa’s rand rose versus most of its 16 of its major counterparts and is headed for a second week of gains as striking workers at Gold Fields Ltd., South Africa’s second- largest producer of the metal, returned to work and other gold- mining companies improved a pay offer to workers.

The currency depreciated 0.1 percent to 8.6614 per dollar after earlier gaining 0.6 percent.

China’s yuan advanced for an 11th week, the longest winning streak since 2008, as factory output and spending data fueled optimism the economic slowdown is coming to an end. The currency touched a 19-year high yesterday after reports showed growth in industrial production, retail sales and fixed-asset investment accelerated in September.

The Chinese currency was little changed today at 6.2535 and increased 0.2 percent this week. The yuan has advanced 2.3 percent since reaching this year’s low on July 25.

“We’ve had optimism surrounding China this week,” Jane Foley, a senior currency strategist at Rabobank International in London said in a Bloomberg Radio interview with Tom Keene and Ken Prewitt. “The market is now beginning to think that maybe China has avoided that hard landing and maybe things will improve from here.”

Euro Goals
European leaders committed to their goal of establishing a euro-area bank supervisor by year-end at the summit. The EU will seek to agree on a framework that makes the European Central Bank the main supervisor by Jan. 1, according to conclusions released today. The new system will be phased in over the next year and may cover all 6,000 euro-area banks by Jan. 1, 2014.

Rajoy said the EU summit in Brussels, which entered a second day today, made “significant progress” and showed that the EU would fulfill its commitments. He also said his government would take a decision on asking for any bailout based on Spain’s interest.

“There is some disappointment over the latest EU summit,” said Neil Jones, head of European hedge-fund sales at Mizuho Corporate Bank Ltd. in London. “That’s why the euro is a bit lower. We need some fresh good news to get things going further. It’s not apparent today.”

Weekly Advance
The euro still gained on the week versus the dollar and yen on bets the sovereign-debt crisis is easing.

The common currency appreciated 3.3 percent in the past three months, according to Bloomberg Correlation-Weighted Indexes tracking 10-developed market currencies. The yen dropped 4.2 percent and the dollar declined 3.2 percent.

“When the markets are really pushing up the temperature and yields are moving higher, that’s the point when the politicians and the ECB have to come in and do something about it,” Rabobank’s Foley said. “Right now, all the pressure is being relived so as a consequence we’re not going anywhere, at least not fast.”

Italian bond yields have declined 32 basis points, or 0.32 percentage point, to 4.77 percent in October. They fell 76 basis points in September. Yields on Spanish bonds have fallen 57 basis points in September after a 92-basis-point decline in October.

Canadian consumer prices rose 1.2 percent in September from a year ago, matching the August pace, Statistics Canada said today from Ottawa. The central bank’s preferred core rate slowed to 1.3 percent from 1.6 percent in August, the least in more than a year. Economists surveyed by Bloomberg forecast total inflation of 1.3 percent and a core rate of 1.4 percent.

The loonie, as the currency is nicknamed, fell 0.8 percent to 99.36 cents per U.S. dollar, touching the weakest level since Aug. 24.

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]

Dollar hits 3-month high vs yen, BOJ easing eyed

SINGAPORE | Mon Oct 22, 2012 8:01pm EDT

Oct 23 (Reuters) - The dollar hit a three-month high against the yen on Tuesday, as the yen sagged on growing market expectations for the Bank of Japan to expand its monetary stimulus at a policy meeting next week.

The dollar rose to as high as 80.02 yen on trading platform EBS, its highest level since early July, and last stood at 79.99 yen, up 0.1 percent from late U.S. trade on Monday.

 

[Muthukali]

N.Z. Dollar Touches One-Month Versus Yen After RBNZ
By Garfield Reynolds and Masaki Kondo - Oct 25, 2012 9:20 AM GMT+0800

New Zealand’s dollar rose to a near six-month high versus the yen after the central bank left interest rates unchanged and said market sentiment has improved.

The so-called kiwi climbed for a second day against the U.S. dollar after newly installed Reserve Bank of New Zealand Governor Graeme Wheeler said inflation is expected to accelerate. Australia’s dollar rose for a second day versus the yen as swaps traders cut bets that the South Pacific nation’s central bank will reduce borrowing costs next month.

“Wheeler disappointed those in the market who had been expecting an easing signal,” said Imre Speizer, a market strategist in Auckland at Westpac Banking Corp. (WBC), Australia’s No. 2 lender. “The market was fully priced for a January rate cut, and that pricing will be at least partially unwound.”

The New Zealand dollar climbed 0.4 percent to 65.74 yen as of 12:10 p.m. in Sydney, the most since April 30. It added 0.2 percent to 82.24 U.S. cents. Australia’s dollar rose to 82.81 yen, the highest since Sept. 19, up 0.2 percent from yesterday’s close. The Aussie climbed 0.1 percent to $1.0362.

The MSCI Asia Pacific Index (MXAP) of shares advanced 0.3 percent, snapping a four-day decline and boosting the allure of higher- yielding currencies.

The RBNZ expects annual inflation to head back to the middle of its 1 percent to 3 percent target range from 0.8 percent in the third quarter, Wheeler said in a statement. Improved market sentiment suggests that risks to the global outlook are “more balanced,” he said.

Australia’s statistics bureau said yesterday the so-called core inflation rate rose 2.4 percent in the three months ended Sept. 30, surpassing the 2.2 percent increase estimated by economists.

Overnight-index swaps data compiled by Bloomberg show traders see a 63 percent chance Australia’s central bank will lower its key rate to 3 percent at its Nov. 6 meeting, compared with a 97 percent likelihood signaled on Oct. 22.

To contact the reporters on this story: Garfield Reynolds in Sydney at [email protected]; Masaki Kondo in Singapore at [email protected]

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

 

[Muthukali]

Euro Stays Lower Before German, French Confidence Data
By Monami Yui and Mariko Ishikawa - Oct 25, 2012 9:59 AM GMT+0800

The euro remained lower against its major counterparts amid signs the region’s debt crisis is hampering growth in its biggest economies.

The 17-nation euro traded below $1.30 for a third day before data tomorrow forecast to show German consumer confidence will fail to improve in November and French household sentiment fell for a fourth month. New Zealand’s dollar climbed to a two- week high following the Reserve Bank’s decision to keep interest rates unchanged. The yen fell against all its major peers as stocks rose and investors speculated that the Bank of Japan (8301) will expand monetary stimulus next week.

“The recession that you’ve got in the peripheries is certainly now spilling over into the core,” Joseph Capurso, a currency strategist in Sydney at Commonwealth Bank of Australia (CBA), the nation’s biggest lender, said of Europe’s economies. “France is in a recession, Germany, if not in a recession, then is very close to it, so that’s certainly not a good sign, and the euro dipped a bit.”

The euro was little changed at $1.2974 at 10:44 a.m. in Tokyo from the close in New York, after declining 0.7 percent over the previous two days. It touched $1.2921 yesterday, the weakest level since Oct. 15. The shared currency rallied 0.2 percent to 103.74 yen. Japan’s currency fell 0.2 percent to 79.95 per dollar, nearing the three-month low of 80.01 reached on Oct. 23.

The Nikkei 225 Stock Average (NKY) of Japanese shares rallied 0.4 percent today, contributing to a 0.2 percent gain on the MSCI Asia Pacific Index. The BOJ will release its forecast for Japan’s consumer prices and growth on Oct. 30 when it holds its second policy meeting this month.

Consumer Confidence
GfK SE (GFK), a market-research company in Nuremberg, Germany, will probably say tomorrow that its consumer-sentiment index will remain at 5.9 for a fourth-straight month in November, according to the median estimate of economists in a Bloomberg News survey. A report from the Ifo institute yesterday showed German business confidence unexpectedly fell to the lowest in more than 2 1/2 years.

In France, household sentiment probably dropped to 84 this month from 85 in September, a separate poll of economists showed. Another report from Spain may show that the unemployment rate increased to 25 percent in the third quarter.

The euro weakened 4.9 percent in the past 12 months, the biggest decline among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen fell 4.7 percent, while the dollar appreciated 2.3 percent.

Wheeler’s NBNZ
Reserve Bank of New Zealand Governor Graeme Wheeler left the official cash rate at a record low 2.5 percent, according to a statement today after a meeting in Wellington. Sluggish domestic demand and a rising currency have pushed inflation below the central bank’s target range of 1 percent to 3 percent target range.

“Wheeler disappointed those in the market who had been expecting an easing signal,” said Imre Speizer, a market strategist in Auckland at Westpac Banking Corp. (WBC), Australia’s second-largest lender. “The market was fully priced for a January rate cut, and that pricing will be at least partially unwound.”

New Zealand’s currency, nicknamed the kiwi, touched 82.35 U.S. cents, the strongest since Oct. 9, before trading at 82.31. It jumped as much as 0.5 percent to 65.83 yen, the most since April 30.

Demand for the dollar was limited after the Federal Reserve said it plans to continue bond buying in a third round of quantitative easing, which tends to debase the U.S. currency.

U.S. GDP
The Fed said yesterday in a statement after a two-day policy meeting that the U.S. economy is still growing modestly and unemployment remains elevated.

The central bank said it will maintain $40 billion in monthly purchases of mortgage-backed securities while keeping a pledge to hold interest rates at virtually zero until at least mid-2015. It also said a program to lengthen the average maturity of its holdings will remain in place until year-end, when it’s scheduled to expire.

U.S. gross domestic product rose at a 1.9 percent annual rate in the third quarter after expanding at a 1.3 percent pace the prior three months, according to the median forecast economists surveyed by Bloomberg ahead of advance data by the Commerce Department tomorrow. It would be the first back-to-back readings lower than 2 percent since the U.S. was emerging from the recession in 2009.

“There’s still a risk the FOMC will do more quantitative easing,” said Commonwealth’s Capurso. “That potential for QE will weigh on the dollar,” he said, referring to the Federal Open Market Committee and quantitative easing.

To contact the reporters on this story: Monami Yui in Tokyo at [email protected]; Mariko Ishikawa in Tokyo at [email protected]

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

 

[Muthukali]

Wheeler Favors Lower N.Z. Currency Without Unorthodox Policies
By Tracy Withers - Oct 26, 2012 8:27 AM GMT+0800

New Zealand’s new central bank chief, in his inaugural address, signaled he wants a weaker currency without having to resort to unorthodox policy that may disrupt his efforts to contain inflation.

The Reserve Bank of New Zealand “wishes to see a lower exchange rate provided it can be achieved without damaging price stability and financial stability,” Governor Graeme Wheeler said today in a speech in Auckland. “There are clear limits to what monetary policy and exchange-rate intervention can do to lower the New Zealand dollar.”

Wheeler’s views underscore a challenge facing central bankers in small, trade-dependent economies whose currencies are elevated as investors seek returns unavailable from Japan to the U.S. and Europe, where interest rates are at or near record lows. Even as New Zealand’s unemployment rate rises, growth struggles to accelerate and inflation slows, the local dollar’s 5.4 percent gain this year makes it the best performer among the Group of 10 currencies.

“The high New Zealand dollar is clearly worrying the RBNZ,” Mark Smith, senior economist at ANZ Bank New Zealand Ltd. in Wellington, said in an e-mailed note. Wheeler “is realistic about the impact that domestic monetary policy can achieve. Cash rate cuts to take pressure off the dollar are not in prospect.”

The currency, which rose to a three-week high of 82.43 cents yesterday, fell after Wheeler’s speech, buying 81.83 cents at 12:22 p.m. in Wellington. There is a 46 percent chance of a rate cut by March, according to overnight indexed swaps data compiled by Bloomberg.

Bollard’s Successor
Wheeler today ruled out quantitative easing and explained that rate cuts are unlikely to achieve a sustainably lower exchange rate. Today’s speech was the former World Bank official’s first since he took over from Alan Bollard in late September.

Yesterday, he kept the official cash rate at a record-low 2.5 percent, forecasting that inflation will accelerate toward the middle of the 1 percent to 3 percent range he is required to target. The decision to pause helped boost the local dollar as traders reduced bets he would cut borrowing costs.

The so-called kiwi’s gains have curbed manufacturers’ exports, limited investment in tourism and hurt the earnings of companies that compete with cheaper imports, Wheeler said today. The nation posted its widest trade deficit since 2009 in the year ended Sept. 30 as exports fell to a 20-month low, a government report showed today.

Intervention Option
While Wheeler said the central bank is prepared to sell the dollar, he reiterated there are conditions around intervention. Those include a currency that’s historically and unjustifiably high, and the central bank needs to be sure that the timing of its sales will have an effect.

“Intervention is unlikely to have a sustained impact on the currency but can have an impact in the short term if the Reserve Bank makes the right calls,” he said. “We will remain vigilant on these criteria and will be prepared to intervene if all conditions are met.”

The intervention criteria are unchanged, and the comments echo those of deputy Governor Grant Spencer in a 2007 speech. The central bank last disclosed it sold the currency in June 2007.

The Reserve Bank governor “poured several buckets of cold water on the idea that the Reserve Bank can ‘fix’ the high exchange rate,” said Cameron Bagrie, chief economist at ANZ National Bank Ltd., in a research note today.

Weaker Currency
Wheeler also downplayed the merits of cutting rates to influence the currency, countering claims from the New Zealand Council of Trade Unions that he should have lowered borrowing costs yesterday.

“Reducing interest rates can at times reduce pressure on the exchange rate but analysis of past OCR cuts in New Zealand shows on average minimal or no intra-day impact on the exchange rate, and even less impact on a weekly basis,” he said. “This reinforces the idea that the exchange rate primarily reflects returns in the broader economy rather than simply returns in the money market.”

To achieve a long-lasting exchange rate decline, the nation needs to tackle its “addiction of depending on foreign savings” to finance consumption and investment, he said.

New Zealand doesn’t need quantitative easing, Wheeler said, referring to central bank asset purchases. There is first scope to cut borrowing costs if needed, he said. The central bank doesn’t see merit in using monetary policy to achieve target rates of economic growth, he said.

Slowing Inflation
Consumer prices rose 0.8 percent in the year through September, the slowest in more than 12 years and below the 1 percent to 3 percent range he targets.

Wheeler, 60, succeeded Bollard on Sept. 26, returning to New Zealand after 15 years that included being co-managing director of the World Bank from 2006 to 2010. Under New Zealand law, the central bank governor alone makes the decision on interest rates after taking advice from a staff panel that doesn’t vote and doesn’t publish its minutes.

Before starting, he signed an agreement with Finance Minister Bill English that included a requirement to focus on keeping annual price changes near 2 percent to help anchor inflation expectations.

To contact the reporter on this story: Tracy Withers in Wellington at [email protected]

To contact the editor responsible for this story: Stephanie Phang at [email protected]

 

[Muthukali]

Yen Strengthens From Four-Month Low on Demand for Safety
By Allison Bennett - Oct 27, 2012 5:17 AM GMT+0800

The yen rose from a four-month low against the dollar as disappointing U.S. corporate results and record unemployment in Spain boosted the allure of the relative safety of Japan’s currency.

The Japanese currency still had a five-day loss versus the greenback amid bets the Bank of Japan (8301) will increase monetary stimulus next week. South Africa’s rand climbed. Europe’s shared currency dropped after Spanish unemployment data showed a record one in four residents was out of work last quarter.

“Given that Japan is a capital exporter, has a very large foreign asset position, if there are rising risks, even for domestic reasons, you tend to see money flowing back,” said Aroop Chatterjee, a currency strategist at Barclays Plc in New York. “The yen is the move that stands out today. The chances are still fairly high that the BOJ goes in for additional easing, so I would not be fully unwinding bets on that just yet.”

Japan’s currency gained 0.8 percent to 79.65 per dollar at 5 p.m. New York time after touching 80.38 earlier, the weakest since June 25. It lost 0.4 percent this week. The yen advanced 0.8 percent to 103.05 per euro and touched 102.69, the strongest since Oct. 16. It rose 0.2 percent on the week. The greenback was little changed at $1.2938 to the 17-nation currency after reaching $1.2883 earlier, the strongest level since Oct. 11. It gained 0.7 percent over the past five days.

Yield Spread
The yen was also supported against the dollar as U.S. Treasuries’ yield advantage over Japan’s government securities narrowed, making American debt less attractive to Asian investors. The yield spread between U.S. and Japanese 10-year bonds shrank to 99 basis points, or 0.99 percentage point, from 104 basis points yesterday.

The Japanese currency typically gains in times of political, financial and economic turmoil because the nation’s historical trade surplus means the nation doesn’t have to rely on overseas lenders.

The Bank of Japan will release a forecast for the nation’s consumer prices and growth on Oct. 30, when it holds its second policy meeting this month. The Nikkei newspaper reported yesterday the central bank may increase its asset-purchase target by 10 trillion yen ($125 billion) to 90 trillion yen.

“Recently the data has been somewhat more mixed, and the market has been concerned about corporate earnings,” said Sebastien Galy, a senior foreign-exchange strategist at Societe Generale SA in New York. “The yen had been weakening because of the expectation of the expansion of the balance sheet by the BOJ relative to the Fed, which was also in line with rising expectations for the U.S. economy.”

Dollar Index
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 79.997 after earlier rising above its 50-day moving average of 80.155. It touched 80.270, the highest level since Sept. 11.

The gauge may climb to a seven-week high between 80.65 and 80.70 after rising through resistance at 80.20, Niall O’Connor, a New York-based technical analyst at JPMorgan, wrote today in a note to clients. The 200-day moving average is 80.65. Resistance is an area on a chart where sell orders may be clustered.

South Africa’s rand climbed 1.2 percent to 8.6431 to the dollar after the U.S. economy grew more than forecast in the third quarter. America is the second-largest destination for the nation’s exports.

Kiwi Gains
New Zealand’s dollar, nicknamed the kiwi, gained 0.6 percent to 82.29 U.S. cents, approaching the three-week high of 82.43 cents that it reached yesterday.

U.S. gross domestic product expanded at a 2 percent annual pace after gaining 1.3 percent in the prior quarter, Commerce Department figures showed today in Washington. A Bloomberg survey had forecast a rise to 1.8 percent. The economy grew at a 4.1 percent pace from October through December 2011.

The euro has tumbled 2.1 percent this year against nine developed-nation currencies tracked by Bloomberg Correlation- Weighted Indexes. The yen lost the most, 5.6 percent, and the dollar fell 1.9 percent. New Zealand’s dollar was the biggest winner, rallying 4.5 percent.

Spain’s unemployment rate rose to 25.02 percent, from 24.6 percent in the previous quarter, the National Statistics Institute said in Madrid today. It was the highest level since at least 1976, the year after dictator Francisco Franco’s death led Spain to democracy.

“We’ve seen the euro a bit lower,” said Peter Frank, a foreign-exchange strategist at Banco Bilbao Vizcaya Argentaria SA (BBVA) in London. “What’s been a marginal underperformance in the growth outlook in the euro zone in the past few quarters is turning into quite a big gulf” as other major economies show signs of recovery, he said.

Crisis Outlook
Speculation increased that Europe’s three-year-old sovereign-debt crisis may worsen after German Finance Minister Wolfgang Schaeuble said there are doubts about whether Greece, where the turmoil began, has met its commitments for an international bailout.

“We do want Greece to be able to stay in the euro zone,” Schaeuble said in an e-mail release of an interview to be broadcast Oct. 30 on ZDF television. “But Greece has a lot to do. It’s not decided.”

The Canadian dollar weakened for a fourth day against the greenback, the longest losing streak since May, on concern demand for the nation’s natural resources will decline as investors question global-growth prospects. Futures on crude oil, Canada’s biggest export, touched $85 a barrel in New York, almost a three-month low.

The loonie, as the currency is nicknamed for the image of the aquatic bird on the C$1 coin, weakened 0.2 percent to 99.69 cents per U.S. dollar.

The Standard & Poor’s 500 Index fluctuated as investors watched economic and earnings reports. Goodyear Tire & Rubber Co., the biggest U.S. tiremaker, reported third-quarter profit below analysts’ estimates. Apple Inc. forecast earnings yesterday that fell short of analyst estimates.

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

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

 

[Muthukali]

Yen Strengthens Before U.S. Elections; Aussie, Grains Advance
By Richard Frost and Adam Haigh - Nov 6, 2012 1:38 PM GMT+0800

The yen strengthened before U.S. presidential elections and the Australian dollar rallied the most in two weeks after the nation’s central bank surprised economists by leaving interest rates unchanged. Industrial metals and grains rose, along with FTSE 100 Index futures.

The yen advanced against 15 of 16 major counterparts, climbing 0.4 percent versus the euro as of 2:37 p.m. in Tokyo. The so-called Aussie jumped 0.7 percent to $1.0433. Copper, wheat and soybeans increased at least 0.4 percent. The MSCI Asia Pacific Index was little changed, while the Shanghai Composite Index sank 1.5 percent ahead of China’s leadership congress this week. Standard & Poor’s 500 Index (SPX) futures added 0.1 percent and FTSE 100 contracts gained 0.3 percent.

U.S. voters decide today between giving President Barack Obama another four years in office or replacing him with Republican challenger Mitt Romney. The Reserve Bank of Australia left the overnight cash-rate target at 3.25 percent, citing a stabilizing global economy. China’s President Hu Jintao is due to hand over the Communist Party leadership to Vice President Xi Jinping at a congress that begins Nov. 8.

The U.S. polls are “literally a dead heat,” E. William Stone, chief investment strategist at PNC Wealth Management in Philadelphia, said in a Bloomberg Television interview. His firm manages about $112 billion. “The market in a lot of ways just reflects that. It frankly doesn’t know which way it’s going to go. That’s why everyone seems to be waiting more than normal.”

About five stocks declined for every four that rose in MSCI’s Asian index. Gauges (MXAP) of industrial and financial companies declined, while utilities advanced.

Earnings Miss
HSBC Holdings Plc dropped 1.7 percent in Hong Kong after reporting profit that missed estimates and saying it’s likely to face criminal charges from U.S. anti-money-laundering probes. Sembcorp Marine Ltd. (SMM) sank 5.1 percent in Singapore as third- quarter earnings almost halved. SapuraKencana Petroleum Bhd. jumped 6.3 percent in Kuala Lumpur following an agreement to buy Seadrill Ltd.’s tender-rig operations in a $2.9 billion deal.

Swings in U.S. stocks have shrunk to the lowest level in six years, an indicator that has most often coincided with incumbent parties keeping the presidency in data going back to 1900. The Dow Jones Industrial Average has gained or lost 0.54 percent a day on average this year, the smallest fluctuations for an election year since George W. Bush defeated John Kerry in 2004, according to data compiled by Bloomberg.

Presidential Polls
Obama led Romney 48 percent to 45 percent in an Oct. 31 Nov. 3 national poll conducted by the Pew Research Center, a survey that was deadlocked at 47 percent each a week ago. Polls conducted by NBC News with the Wall Street Journal and ABC News with the Washington Post also showed movement for the president in recent days, albeit a 1 percentage point edge for Obama that is inside the margin of error for both surveys.

The yen rose 0.4 percent to 102.35 against the euro and advanced 0.3 percent to 80.05 per dollar.

Greek Prime Minister Antonis Samaras will this week battle to win political support for measures needed to obtain aid. While no date has been set for a vote on that bill, it may come as soon as Nov. 7. The budget vote is slated for Nov. 11.

The Aussie rose from $1.0365 yesterday. Seven of 27 economists surveyed by Bloomberg News predicted the central bank’s decision, with the other 20 saw a cut to 3 percent.

Copper, Nickel
“The United States is recording moderate growth, while recent data from China suggest growth there has stabilized,” RBA Governor Glenn Stevens said today. “Recent outcomes on inflation were slightly higher than expected, though they still show inflation consistent with the medium-term target.”

Copper for three-month delivery in London advanced 0.4 percent to $7,676.75. Nickel futures rose 0.5 percent, while zinc advanced 0.4 percent.

Wheat for delivery in December gained 0.8 percent to $8.725 a bushel in Chicago as deteriorating crop conditions in the U.S., the largest exporter, added to global supply concerns. The grain has jumped 33 percent this year and is the best performer on the Standard & Poor’s GSCI index of 24 commodities. Soybean futures rose 0.9 percent to $15.16 a bushel.

To contact the reporters on this story: Richard Frost in Hong Kong at [email protected]; Adam Haigh in Sydney at [email protected]

To contact the editor responsible for this story: Darren Boey at [email protected]

 

[Muthukali]

Euro Weakens on Economic Outlook; Krona Drops Versus Major Peers
By Allison Bennett - Nov 10, 2012 6:20 AM GMT+0800

The euro slid to a two-month low against the dollar and the weakest level in almost a month versus the yen as a drop in French industrial production added to speculation Europe’s economic outlook is worsening.

The 17-nation currency declined for the week versus the yen and dollar as Greek lawmakers prepared to vote Nov. 11 on next year’s budget. The euro pared losses after U.S. consumer confidence climbed to a five-year high. The yen was stronger on concern U.S. lawmakers may push the world’s biggest economy into recession in a budget-deficit showdown. Sweden’s krona tumbled against all of its 16 most-traded peers.

“There is festering uncertainty on both sides of the Atlantic,” said Joe Manimbo, a market analyst in Washington at Western Union Business Solutions, a unit of Western Union Co. (WU) “It’s a combination of U.S. fiscal woes and the European debt crisis and its growth picture. U.S. data may provide occasional opportunities for investors to book profit on the strong rally we’ve seen for safe currencies.”

The euro fell 0.3 percent to 101.05 yen at 5 p.m. in New York and touched 100.43, the weakest since Oct. 11. It lost 2.1 percent this week. The shared currency declined 0.3 percent to $1.2714 and reached $1.2690, the lowest level since Sept. 7. It dropped 0.9 percent over the past five days in its third weekly loss. The yen was little changed at 79.49 per dollar.

French industrial output slid 2.7 percent from a month earlier, a report showed. The median prediction was for a 1 percent decline. Business confidence in the euro area’s second- largest economy held near a three-year low last month, according to Bank of France data.

Deeper Contraction
“It doesn’t really come as a surprise that there are growth concerns in Europe -- they are in a recession -- but the contraction looks like it may be deeper,” said Eric Viloria, senior currency strategist for Gain Capital Group LLC in New York. “It’s going to add to negativity and weigh on the euro.”

The yen touched 79.08 per dollar, the strongest level since Oct. 18, and gained versus most major peers. The currency typically strengthens in times of political, financial and economic turmoil because Japan’s historical trade surplus means the nation doesn’t have to rely on overseas lenders.

Risk aversion eased after the Thomson Reuters/University of Michigan consumer sentiment index rose to 84.9 in November, the strongest since July 2007, from 82.6 a month earlier. The reading for October was the highest since September 2007. Economists in a Bloomberg survey forecast a preliminary reading of 82.9 for November.

Dollar Index
The Dollar Index (DXY) rose 0.3 percent to 81.058 after rallying earlier to a two-month high of 81.087.

U.S. stocks gained, with the Standard & Poor’s 500 (SPX) Index rising 0.2 percent after falling 0.3 percent earlier.

Mexico’s peso gained from a two-month low versus the greenback after the report on sentiment in its biggest trade partner. The currency was 0.2 percent weaker at 13.2003 per dollar after dropping 0.9 percent earlier to 13.2932.

Brazil’s real fell to a four-month low versus the greenback amid speculation the nation’s central bank will maintain its policy to weaken the currency. The real slid as much as 1.2 percent to 2.0658 per dollar, its weakest level since June, before trading at 2.0462, down 0.3 percent.

Taiwan’s dollar rose against all 16 major counterparts as foreign investors increased holdings of stocks in the Asian nation by $209 million this week. It gained 0.4 percent to 29.010 to the greenback.

Worst Performance
Europe’s shared currency has declined 6 percent over the past year, the worst performance among the 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar gained 0.9 percent and the yen weakened 1.5 percent. The krona was little changed.

Sweden’s currency fell the most in five weeks against the euro. The data provide the central bank more reason to cut interest rates after lowering them three times since December.

The krona depreciated 0.8 percent to 8.5750 per euro, and fell as much as 0.9 percent in the biggest drop since Oct. 3. The currency slid 1.1 percent to 6.7460 per dollar.

Swedish industrial production decreased an annual 5 percent in September after rising a revised 2.7 percent the previous month, Statistics Sweden said on its website. Economists surveyed by Bloomberg News predicted a decline of 0.1 percent.

“The European currencies are suffering, and probably deservedly so,” said Steven Barrow, head of group-of-10 research at Standard Bank Plc in London. “The economic data has been quite poor. Obviously policy makers didn’t respond this week, so maybe that’s a little bit disappointing.”

Greece Aid
The euro fell yesterday against the dollar and yen after a European Union official said euro-area finance ministers may not make a decision on unlocking a 31.5 billion-euro ($40 billion) installment of rescue funds for Greece until late this month.

The finance chiefs will await a final report from the EU, European Central Bank and International Monetary Fund on Greece’s efforts to meet the conditions of its rescue, the official said on condition of anonymity because the deliberations are private. Europe’s debt crisis began in Greece three years ago.

Greek Prime Minister Antonis Samaras eked out a slim parliamentary majority yesterday for a bill on pension, wage and benefit cuts. The next hurdle comes on Nov. 11, when the parliament votes on the nation’s 2013 budget.

Investors have also sought refuge since the re-election of President Barack Obama and a split Congress this week spurred concern lawmakers will be unable to compromise on the budget.

The U.S. faces $1.2 trillion in mandated spending cuts and tax increases over a decade starting Jan. 1 if Congress can’t agree to reduce the deficit, which totaled $1.09 trillion in fiscal 2012. The Congressional Budget Office has said the U.S. economy would slow by as much as 0.5 percent next year if Congress fails to prevent the measures from kicking in.

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

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

 

[Muthukali]

Aussie, Kiwi Halt Declines as Data Shows Factory Growth in China
By Masaki Kondo - Nov 22, 2012 12:31 PM GMT+0800

The Australian and New Zealand dollars snapped two-day declines after a private report showed China’s manufacturing expanded for the first time in 13 months.

The so-called Aussie and kiwi rose against most of their major counterparts after Asian stocks climbed, boosting the allure of higher-yielding assets. Demand for the South Pacific currencies was damped before purchasing managers indexes that economists say will indicate the euro area’s services and manufacturing industries shrank for a 10th month.

“Today’s report underscores the halting of China’s slowdown,” said Teppei Ino, an analyst at Bank of Tokyo- Mitsubishi UFJ Ltd., a unit of Japan’s biggest financial group by market value. “While we have to see further signs of improvement, it’s positive for the Australian dollar.”

Australia’s currency gained 0.1 percent to $1.0382 as of 3:30 p.m. in Sydney after dropping 0.4 percent over the previous two days. The New Zealand dollar added 0.1 percent to 81.55 U.S. cents following a two-day, 0.7 percent slide.

The MSCI Asia Pacific Index (MXAP) of shares rose 0.8 percent. U.S. financial markets are shut today for the Thanksgiving holiday.

Australia’s bonds fell, with the benchmark 10-year yield rising as much as eight basis points, or 0.08 percentage point, to 3.27 percent, the highest since Oct. 26.

HSBC Holdings Plc and Markit Economics said today that their purchasing managers’ index for Chinese manufacturing was at 50.4 in November on a preliminary reading, compared with a final level of 49.5 in October. A reading above 50 indicates expansion.

‘Nice Result’
“The bottom seems to be in for the Chinese manufacturing sector, if we are to take the indications from the PMIs and other incidental data,” Sacha Tihanyi, a Hong Kong-based senior currency strategist at Scotiabank, wrote in an e-mailed note today. “The flash PMI provides a nice result that should help Asian sentiment into the end of the week.”

The Australian dollar has weakened 1.7 percent in the past three months, according to Bloomberg Correlation-Weighted Indexes that track 10 developed-market currencies. The kiwi has slipped 0.2 percent.

Markit Economics is predicted to say today that its composite index for euro-area services and manufacturing was unchanged at 45.7 in November, based on the median estimate of economists surveyed by Bloomberg News. A reading below 50 indicates contraction.

“We haven’t really seen any stabilization as far as the euro-zone economies go,” said Mike Jones, a currency strategist at Bank of New Zealand in Wellington. “The PMI data will feed through to risk appetite and investor confidence, which is important” for currencies such as the Australian and New Zealand dollars, he said.

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

To contact the editor responsible for this story: Garfield Reynolds at [email protected]