If you've just begun trading Forex, you probably want all the help you can get. Though Forex trading can be very lucrative, you'll want a Forex winning system that will work for you. There are several Forex killer systems available just as there are in marketing, sales, and other forms of business. You must find the Forex strategy that works for you, and develop good trading habits for long-term success. Here's a brief Forex winning guide for getting started.
Develop a Forex Trading System that You Can Stick With
Not only do you need a Forex strategy - you also need a system. You can have the best strategy in the world, but if you don't do it systematically, you could lose. Create a schedule of when you will do your Forex trading. Then, create a budget to manage your money coming in and going out. Just like operating any business, you'll have good and bad times. Stay with your Forex trading strategy through up-times and slumps for the best results.
Develop a Forex Trading Plan in Advance
Before the Forex market opens, you should already have a plan as to how you will trade. Don't get caught up in the moment. Carefully plan your investment as if you were making a big decision such as buying a home or a car. Even if the Forex trading amount seems small, treat it as if it were a million dollars. It could turn into that amount one day.
Expect Small Losses
If you plan to do Forex trading for the long haul, expect and accept small losses. They will occur no matter how well you know the market. A Forex winning system is one where you are prepared to accept the small losses in hopes of acquiring something greater in the future.
Be Patient
Remember, steady and slow is the key to any long-term Forex success. Don't sit staring at the quotes all day long! Take a break, enjoy life, and don't see a loss as the end of the world.
Avoid Forex Trading Strategies You Don't Understand
When developing a Forex winning strategy, avoid using methods you don't fully understand. Use helpful Forex guides and tutorials, but beware of Forex scams. There are many out there today - especially email scams. Be leery of companies who want to do your Forex trading for you. Develop a plan with the help of Forex experts, but please do your own trading or choose a reputable broker.
Develop an Exit Plan
Know when it's time to take your money and run! Don't hope for the best when all evidence points toward the worse. It's better to exit your trading with some of your money than to lose it all in a risky trade. Before you begin trading, set limits on how much you will invest - and stick with your limits.
Use this quick Forex guide to develop a strategy that works well for you. Forex trading doesn't have to be stressful. You can realize Forex trading success sooner than you think!
Sunday, September 30, 2007
Friday, September 28, 2007
Dollar continues weaker on growing expectations of further Fed rate cut
HONG KONG (Thomson Financial) - The US dollar continued its weak trend against the euro and the yen in afternoon trade in Asia on growing expectations of a further rate cut the by Federal Reserve next month following weak home sales data.
New home sales in the US declined 8.3 percent in August from a year earlier and most economists were predicting that the Fed will trim its benchmark rates by at least a quarter of a percentage point , helping revive the troubled housing market.
'The weak housing data confirmed in people's minds that the Fed is going to ease interest rates,' said Tim Condon, head of research at ING (nyse: IND - news - people ) Financial Markets in Singapore.
'While a rate cut is bullish for the equities and fixed-income markets in the US, unfortunately it is bearish for the US dollar,' said Condon.
At 1:00 pm (0500 GMT), the dollar was at 115.13 yen, down from 115.45 this morning in Sydney and 115.59 in late New York trade. The euro was at 1.4160 dollars, up from 1.4154 this morning.
The euro hit a record high of 1.4189 dollars Thursday.
The dollar will likely weaken to 115 yen and to 1.42 euro by year-end, before staging a recovery against the two major currencies in 2008, Condon said.
'The US economy will begin to recover in 2008 because of the rate cuts made this year and that will aid the dollar,' Condon said.
The dollar has been weakening against other major currencies including the euro after the Fed's unexpectedly steep half a percentage point rate cut on Sept 18, which made dollar-denominated assets less attractive to investors.
Other economic data that will be released this week are expected to give the Fed more reason to reduce its rates to keep the world's largest economy from slipping into a recession.
The US personal income and spending figures for August and construction spending data, due out later today, are not expected to point to any improvement in the economy.
GFT senior finance analyst Ian Copsey said the dollar has recovered from its lows in European trade, though the currency remains under pressure.
'General consensus is growing that the Fed will be forced to cut rates again and -- on the numbers seen last night -- there is little to suggest otherwise,' Copsey said.
The US economy grew at an annual rate of 3.8 percent in the second quarter, faster than the 0.6 percent expansion in the first quarter. The strong second-quarter growth was overshadowed by concerns that the economy would post slower growth in the second half of the year because of the subprime mortgage crisis that began around August.
Hong Kong 1:00 pm (0500 GMT)
US dollar
115.13 yen
1.1716 sfr
Euro
1.4160 usd
163.04 yen
1.6593 sfr
0.7000 stg
Sterling
2.0223 usd
232.85 yen
2.3696 sfr
Australian dollar
0.8829 usd
0.4364 stg
101.66 yen
New Zealand dollar
0.7573 usd
New home sales in the US declined 8.3 percent in August from a year earlier and most economists were predicting that the Fed will trim its benchmark rates by at least a quarter of a percentage point , helping revive the troubled housing market.
'The weak housing data confirmed in people's minds that the Fed is going to ease interest rates,' said Tim Condon, head of research at ING (nyse: IND - news - people ) Financial Markets in Singapore.
'While a rate cut is bullish for the equities and fixed-income markets in the US, unfortunately it is bearish for the US dollar,' said Condon.
At 1:00 pm (0500 GMT), the dollar was at 115.13 yen, down from 115.45 this morning in Sydney and 115.59 in late New York trade. The euro was at 1.4160 dollars, up from 1.4154 this morning.
The euro hit a record high of 1.4189 dollars Thursday.
The dollar will likely weaken to 115 yen and to 1.42 euro by year-end, before staging a recovery against the two major currencies in 2008, Condon said.
'The US economy will begin to recover in 2008 because of the rate cuts made this year and that will aid the dollar,' Condon said.
The dollar has been weakening against other major currencies including the euro after the Fed's unexpectedly steep half a percentage point rate cut on Sept 18, which made dollar-denominated assets less attractive to investors.
Other economic data that will be released this week are expected to give the Fed more reason to reduce its rates to keep the world's largest economy from slipping into a recession.
The US personal income and spending figures for August and construction spending data, due out later today, are not expected to point to any improvement in the economy.
GFT senior finance analyst Ian Copsey said the dollar has recovered from its lows in European trade, though the currency remains under pressure.
'General consensus is growing that the Fed will be forced to cut rates again and -- on the numbers seen last night -- there is little to suggest otherwise,' Copsey said.
The US economy grew at an annual rate of 3.8 percent in the second quarter, faster than the 0.6 percent expansion in the first quarter. The strong second-quarter growth was overshadowed by concerns that the economy would post slower growth in the second half of the year because of the subprime mortgage crisis that began around August.
Hong Kong 1:00 pm (0500 GMT)
US dollar
115.13 yen
1.1716 sfr
Euro
1.4160 usd
163.04 yen
1.6593 sfr
0.7000 stg
Sterling
2.0223 usd
232.85 yen
2.3696 sfr
Australian dollar
0.8829 usd
0.4364 stg
101.66 yen
New Zealand dollar
0.7573 usd
OUTLOOK - Indonesia August trade surplus 3.17-3.66 billion US dollars
JAKARTA (Thomson Financial) - Indonesia is expected to post a trade surplus of between 3.17 billion and 3.66 billion US dollars in August as imports outpaced exports, economists polled by Thomson Financial said.
The Central Bureau of Statistics will announce the trade data on Monday.
Seven out of nine economists surveyed are looking at a surplus of 3.17-3.5 billion US dollars, or below the 3.55 billion US dollar surplus recorded in July, while two said they were expecting a higher figure in the range of 3.6-3.66 billion US dollars.
August exports are likely to have grown by 5-14.4 percent year-on-year while imports grew 5-16.5 percent, the economists said.
Exports grew to 9.81 billion dollars in July from 9.42 billion in June, while imports rose to 6.26 billion dollars from 5.93 billion.
Bank Internasional Indonesia economist Juniman said he expects exports to fall slightly to 9.76 billion US dollars in August from 9.81 billion in July, while imports picked up slightly to 6.31 billion US dollars from 6.26 billion in July.
"Exports were slightly lower in August partly due to a slight fall in demand from some of our trading partners, in particular the US, probably due to the subprime crisis," Juniman said.
Citigroup economist Anton Gunawan said the trade surplus was lower in August as some commodity prices such as rubber and vegetable oil fell in August, while at the same time, the price of some non-oil and gas imports rose.
Gunawan expects Indonesia's trade surplus to drop to 3.17 billion US dollars in August from 3.55 billion in July.
He said exports of certain non-oil and gas products looks "relatively stable", such as unwoven garments, machineries, wood and wood products.
"We expect imports of capital goods to pick up gradually in line with the increasing economic and investment activities," Gunawan added.
DBS economist Su Sian Lim said overall, Indonesia's trade surplus has been "largely stable" this year.
"Non-oil exports have been growing strongly, thanks in large part to the robust demand for crude palm oil (CPO). However this has been offset by firm import growth, which is reflecting the strengthening in domestic demand," Su Sian said.
Below is a summary of the June trade surplus forecasts of the different brokerages as well as their export and import growth projections:
Citigroup: 3.17 billion US dollars; up 7.9 percent yr-on-yr, up 12.2 percent yr-on-yr
DBS: 3.4 billion US dollars; up 11.1 percent yr-on-yr; up 14.0 percent yr-on-yr
Ideaglobal : 3.4 billion US dollars; up 10.7 percent yr-on-yr, up 14.1 percent yr-on-yr
ING: 3.42 billion US dollars; up 12 percent yr-on-yr; up 15 percent yr-on-yr
BII: 3.45 billion US dollars, up 9.49 percent yr-on-yr, up 10.58 percent yr-on-yr
Mandiri Sekuritas: 3.46 billion US dollars, up 13.4 percent yr-on-yr, up 16.5 percent yr-on-yr
Action Economics: 3.5 billion US dollars, up 13 percent yr-on-yr, up 15.5 percent yr-on-yr
BNI: 3.6 billion US dollars, up 5 percent yr-on-yr, up 5 percent yr-on-yr
Lippo Bank: 3.66 billion US dollars, up 14.4 percent yr-on-yr, up 15.85 percent yr-on-yr
(1 US dollar = 9,140 rupiah)
The Central Bureau of Statistics will announce the trade data on Monday.
Seven out of nine economists surveyed are looking at a surplus of 3.17-3.5 billion US dollars, or below the 3.55 billion US dollar surplus recorded in July, while two said they were expecting a higher figure in the range of 3.6-3.66 billion US dollars.
August exports are likely to have grown by 5-14.4 percent year-on-year while imports grew 5-16.5 percent, the economists said.
Exports grew to 9.81 billion dollars in July from 9.42 billion in June, while imports rose to 6.26 billion dollars from 5.93 billion.
Bank Internasional Indonesia economist Juniman said he expects exports to fall slightly to 9.76 billion US dollars in August from 9.81 billion in July, while imports picked up slightly to 6.31 billion US dollars from 6.26 billion in July.
"Exports were slightly lower in August partly due to a slight fall in demand from some of our trading partners, in particular the US, probably due to the subprime crisis," Juniman said.
Citigroup economist Anton Gunawan said the trade surplus was lower in August as some commodity prices such as rubber and vegetable oil fell in August, while at the same time, the price of some non-oil and gas imports rose.
Gunawan expects Indonesia's trade surplus to drop to 3.17 billion US dollars in August from 3.55 billion in July.
He said exports of certain non-oil and gas products looks "relatively stable", such as unwoven garments, machineries, wood and wood products.
"We expect imports of capital goods to pick up gradually in line with the increasing economic and investment activities," Gunawan added.
DBS economist Su Sian Lim said overall, Indonesia's trade surplus has been "largely stable" this year.
"Non-oil exports have been growing strongly, thanks in large part to the robust demand for crude palm oil (CPO). However this has been offset by firm import growth, which is reflecting the strengthening in domestic demand," Su Sian said.
Below is a summary of the June trade surplus forecasts of the different brokerages as well as their export and import growth projections:
Citigroup: 3.17 billion US dollars; up 7.9 percent yr-on-yr, up 12.2 percent yr-on-yr
DBS: 3.4 billion US dollars; up 11.1 percent yr-on-yr; up 14.0 percent yr-on-yr
Ideaglobal : 3.4 billion US dollars; up 10.7 percent yr-on-yr, up 14.1 percent yr-on-yr
ING: 3.42 billion US dollars; up 12 percent yr-on-yr; up 15 percent yr-on-yr
BII: 3.45 billion US dollars, up 9.49 percent yr-on-yr, up 10.58 percent yr-on-yr
Mandiri Sekuritas: 3.46 billion US dollars, up 13.4 percent yr-on-yr, up 16.5 percent yr-on-yr
Action Economics: 3.5 billion US dollars, up 13 percent yr-on-yr, up 15.5 percent yr-on-yr
BNI: 3.6 billion US dollars, up 5 percent yr-on-yr, up 5 percent yr-on-yr
Lippo Bank: 3.66 billion US dollars, up 14.4 percent yr-on-yr, up 15.85 percent yr-on-yr
(1 US dollar = 9,140 rupiah)
Wednesday, September 26, 2007
Dollar resumes fall
The dollar resumed its fall against the euro Tuesday, the fourth consecutive day of record lows, after a pair of economic reports pointed to the possibility of further interest-rate cuts by the Federal Reserve.
The euro rose to its fourth consecutive record high, $1.4153, after worrying consumer confidence and home sales data were released Tuesday morning. By late afternoon in New York, the 13-nation euro was at $1.4146 compared with $1.4087 late Monday.
The New York-based Conference Board said worries about jobs and the economy drove the U.S. Consumer Confidence Index for September to 99.8, below analysts' expectations. The index is at its lowest level since November 2005.
U.S. economic concerns were compounded by two housing reports. Sales of existing homes fell for a sixth straight month in August, pushing sales to the lowest point since 2002 because of turmoil in credit markets, a second report showed. U.S. home prices declined in July, posting their steepest drop in 16 years.
The declines may cause the Federal Reserve to lower its benchmark interest rate further, said David Jones, chief markets analyst at CMC Markets in London.
"It's clearly still too soon for last week's rate cut by the Fed to be taking any effect, but the question is now what happens at the two remaining meetings this year," he said.
It was a half-point interest rate cut to 4.75 percent by the U.S. central bank last week that dragged the dollar down. That came in response to the market turbulence in the fallout from the subprime mortgage crisis, and many analysts see more rate cuts ahead.
Lower interest rates, used to jump-start an economy, can weaken a currency as investors transfer funds to countries where their deposits and fixed-income investments bring higher returns.
A weaker dollar makes vacations in Europe more expensive for U.S. travelers and could make European-made products more expensive for American consumers. But the lower dollar versus the euro also makes U.S. exports more competitive in Europe, which could benefit American manufacturers.
In other New York trading, the dollar slipped to 114.55 yen from 114.88 yen after Yasuo Fukuda, who has promised to bring stability and moderation to Japan's political scene, was elected prime minister.
The dollar rose against the British pound, to $2.0180 from $2.0214.
The dollar fell against the Swiss franc, from 1.1730 late Monday to 1.1661, and it rose slightly against the Canadian currency, to 1.0014 from 1.0011.
The euro rose to its fourth consecutive record high, $1.4153, after worrying consumer confidence and home sales data were released Tuesday morning. By late afternoon in New York, the 13-nation euro was at $1.4146 compared with $1.4087 late Monday.
The New York-based Conference Board said worries about jobs and the economy drove the U.S. Consumer Confidence Index for September to 99.8, below analysts' expectations. The index is at its lowest level since November 2005.
U.S. economic concerns were compounded by two housing reports. Sales of existing homes fell for a sixth straight month in August, pushing sales to the lowest point since 2002 because of turmoil in credit markets, a second report showed. U.S. home prices declined in July, posting their steepest drop in 16 years.
The declines may cause the Federal Reserve to lower its benchmark interest rate further, said David Jones, chief markets analyst at CMC Markets in London.
"It's clearly still too soon for last week's rate cut by the Fed to be taking any effect, but the question is now what happens at the two remaining meetings this year," he said.
It was a half-point interest rate cut to 4.75 percent by the U.S. central bank last week that dragged the dollar down. That came in response to the market turbulence in the fallout from the subprime mortgage crisis, and many analysts see more rate cuts ahead.
Lower interest rates, used to jump-start an economy, can weaken a currency as investors transfer funds to countries where their deposits and fixed-income investments bring higher returns.
A weaker dollar makes vacations in Europe more expensive for U.S. travelers and could make European-made products more expensive for American consumers. But the lower dollar versus the euro also makes U.S. exports more competitive in Europe, which could benefit American manufacturers.
In other New York trading, the dollar slipped to 114.55 yen from 114.88 yen after Yasuo Fukuda, who has promised to bring stability and moderation to Japan's political scene, was elected prime minister.
The dollar rose against the British pound, to $2.0180 from $2.0214.
The dollar fell against the Swiss franc, from 1.1730 late Monday to 1.1661, and it rose slightly against the Canadian currency, to 1.0014 from 1.0011.
Monday, September 24, 2007
Forex - Dollar stays weak on expectations for poor data this week
LONDON, Sep. 24, 2007 (Thomson Financial delivered by Newstex) -- Major currencies stayed range-bound, with the dollar floundering ahead of this week's US data that are expected to show continued weakness in housing and consumer confidence, boosting expectations for further cuts in US interest rates.
The dollar fell to a new all-time low against the single European currency of 1.4129 usd this morning before edging back up, and it was also weaker against the pound and yen.
A cut in the Federal Reserve's benchmark interest rate of 50 basis points, to 4.75 pct, sparked the recent run of dollar weakness, exacerbating the pressure on the currency from the subprime mortgage crisis and credit crunch.
Currency analysts expect the dollar to fall further this week.
'The general tone of the US data this week is likely to compound expectations for further cuts in US interest rates - with market attention now settling on the possibility of a further quarter point-cut at the October
Federal Open Markets Committee meeting,' said economists at Bear Stearns. (NYSE:BSC)
They predict the dollar will drop to as low as 1.50 usd to the euro in the coming months.
Data on Tuesday are expected to show US consumer confidence falling to 104.5 in September from 105 in August, and existing home sales dropping to 5.445 mln in August from 5.75 mln the prior month, according to forecasts from Thomson IFR Markets.
Before that, indications on the Fed's thinking will come from speeches by FOMC member Richard Fisher and chairman Ben Bernanke today, and Bernanke again on Thursday.
Elsewhere, euro zone data this week will be scrutinised for signs that the strong euro is harming the area's economy. Foremost among the data will be Germany's IFO index of business confidence on Tuesday and euro zone consumer price inflation figures later on.
'The mounting strength of the euro is building pressure on the ECB to ease the pain with a cut in rates - which should be justified by the weakening economic confidence and growth picture in the euro zone,' said the Bear Stearns economists.
They expect a weaker IFO reading and a sharp rise in the headline HICP inflation figure.
Meanwhile, the yen was steady after the news that Yasuo Fukuda will become prime minister of Japan following his election as president of the Liberal Democrat party yesterday.
'His victory was well anticipated by the market and hence is likely to have little, if not any, impact on the market,' said BNP Paribas (OOTC:BPRBF) analysts.
London 0811 GMT Hong Kong 1.00 pm (0500 GMT)
US dollar
yen 114.94 down from 115.05
sfr 1.1700 down from 1.1705
Euro
usd 1.4119 up from 1.4102
yen 162.25 down from 162.28
sfr 1.6526 up from 1.6506
stg 0.6966 up from 0.6960
Sterling
usd 2.0254 unchanged 2.0254
yen 232.77 down from 233.06
sfr 2.3714 up from 2.3708
Australian dollar
usd 0.8666 up from 0.8662
stg 0.4277 down from 0.4376
yen 99.57 down from 99.67
The dollar fell to a new all-time low against the single European currency of 1.4129 usd this morning before edging back up, and it was also weaker against the pound and yen.
A cut in the Federal Reserve's benchmark interest rate of 50 basis points, to 4.75 pct, sparked the recent run of dollar weakness, exacerbating the pressure on the currency from the subprime mortgage crisis and credit crunch.
Currency analysts expect the dollar to fall further this week.
'The general tone of the US data this week is likely to compound expectations for further cuts in US interest rates - with market attention now settling on the possibility of a further quarter point-cut at the October
Federal Open Markets Committee meeting,' said economists at Bear Stearns. (NYSE:BSC)
They predict the dollar will drop to as low as 1.50 usd to the euro in the coming months.
Data on Tuesday are expected to show US consumer confidence falling to 104.5 in September from 105 in August, and existing home sales dropping to 5.445 mln in August from 5.75 mln the prior month, according to forecasts from Thomson IFR Markets.
Before that, indications on the Fed's thinking will come from speeches by FOMC member Richard Fisher and chairman Ben Bernanke today, and Bernanke again on Thursday.
Elsewhere, euro zone data this week will be scrutinised for signs that the strong euro is harming the area's economy. Foremost among the data will be Germany's IFO index of business confidence on Tuesday and euro zone consumer price inflation figures later on.
'The mounting strength of the euro is building pressure on the ECB to ease the pain with a cut in rates - which should be justified by the weakening economic confidence and growth picture in the euro zone,' said the Bear Stearns economists.
They expect a weaker IFO reading and a sharp rise in the headline HICP inflation figure.
Meanwhile, the yen was steady after the news that Yasuo Fukuda will become prime minister of Japan following his election as president of the Liberal Democrat party yesterday.
'His victory was well anticipated by the market and hence is likely to have little, if not any, impact on the market,' said BNP Paribas (OOTC:BPRBF) analysts.
London 0811 GMT Hong Kong 1.00 pm (0500 GMT)
US dollar
yen 114.94 down from 115.05
sfr 1.1700 down from 1.1705
Euro
usd 1.4119 up from 1.4102
yen 162.25 down from 162.28
sfr 1.6526 up from 1.6506
stg 0.6966 up from 0.6960
Sterling
usd 2.0254 unchanged 2.0254
yen 232.77 down from 233.06
sfr 2.3714 up from 2.3708
Australian dollar
usd 0.8666 up from 0.8662
stg 0.4277 down from 0.4376
yen 99.57 down from 99.67
Dollar Forward Rates
LONDON (Thomson Financial) - New York
1 mth 15.69 - 14.94 prm
3 mths 51.20 - 50.20 prm
6 mths 114.10 - 112.60 prm
12 mths 236.25 - 233.25 prm
TFN.newsdesk@thomson.com
1 mth 15.69 - 14.94 prm
3 mths 51.20 - 50.20 prm
6 mths 114.10 - 112.60 prm
12 mths 236.25 - 233.25 prm
TFN.newsdesk@thomson.com
Saturday, September 22, 2007
Treasurys rise after three-day rout
NEW YORK (AP) - Long-term Treasury prices managed their first gains in three days Friday, in a partial recovery from a rout sparked by nervousness that a sizable new U.S. rate cut will accelerate inflation.
Treasury yields were driven up to enticingly rich levels in heavy selling earlier in the week, as prices and yields move in opposite directions. Although the Treasury market remains very uneasy with the inflationary implications of the rate cut, current yield levels are attractive to investors.
The benchmark 10-year Treasury note closed 16/32 higher at 100 29/32 with a yield of 4.63 percent, down from 4.67 percent at Thursday's close.
The 30-year long bond gained 1 7/32 to 101 22/32 with a yield of 4.89 percent, down from 4.95 percent late Thursday.
The 2-year note rose 3/32 to 99 28/32 with a 4.05 percent yield, down from 4.09 percent on Thursday.
The yield on 3-month Treasury bills ended at 3.65 percent, down from 3.70 percent on Thursday, as the discount rate fell 0.08 percentage point to 3.62 percent.d
Demand for Treasurys also was stirred by remarks from Federal Reserve Vice Chairman Donald Kohn that the Fed probably would not have cut rates so much this week had housing prices continued to track higher. Signs of economic weakness tend to stir demand for Treasurys because they are low-risk and carry a government guarantee.
Many Treasury investors were startled when the Fed put in place the half percentage point cut on Tuesday. Expectations had been for a smaller quarter percentage point reduction.
Lower rates were cheered in other markets because they cheapen money and stimulate the economy. But less expensive money also tempts sellers to lift their prices, in turn stimulating inflation. The Treasury market detests inflation because it eats into the value of assets.
Despite Friday's price gains, T.J. Marta, a fixed-income strategist at RBC Capital Markets, predicted that market action in coming sessions will be dominated by the "curve steepening" moves that largely have driven trade since the Federal Reserve cut rates.
"We are mainly seeing selling of the longer-dated maturities," Marta said.
Under a curve steepening strategy, investors put heavy selling pressure on the 30-year long bond and other longer-dated maturities and less pressure on shorter-term assets such as the 2-year note.
The result is that there is a bigger difference between the yields of longer- and shorter-term assets, which restores the motive for lending money for longer periods. These market plays also are a signal that fixed-income market investors expect both higher inflation and further rate cuts.
Heavy selling of Treasurys on Tuesday, Wednesday and Thursday sent yields 3.5 percent higher for the 10-year note and 3.8 percent higher for the 30-year bond on the week, given that price losses fatten yields. These are unusually big moves for Treasury yields and they reflect the fixed-income market's preoccupation that inflation will be exacerbated by rate reductions.
"It has been quite a week and it appears that the back and forth volatility will continue for the days and weeks ahead until the Federal Open Market Committee next meets at the end of October," said Kevin Giddis, managing director of fixed income at Morgan Keegan & Co.
Treasury yields were driven up to enticingly rich levels in heavy selling earlier in the week, as prices and yields move in opposite directions. Although the Treasury market remains very uneasy with the inflationary implications of the rate cut, current yield levels are attractive to investors.
The benchmark 10-year Treasury note closed 16/32 higher at 100 29/32 with a yield of 4.63 percent, down from 4.67 percent at Thursday's close.
The 30-year long bond gained 1 7/32 to 101 22/32 with a yield of 4.89 percent, down from 4.95 percent late Thursday.
The 2-year note rose 3/32 to 99 28/32 with a 4.05 percent yield, down from 4.09 percent on Thursday.
The yield on 3-month Treasury bills ended at 3.65 percent, down from 3.70 percent on Thursday, as the discount rate fell 0.08 percentage point to 3.62 percent.d
Demand for Treasurys also was stirred by remarks from Federal Reserve Vice Chairman Donald Kohn that the Fed probably would not have cut rates so much this week had housing prices continued to track higher. Signs of economic weakness tend to stir demand for Treasurys because they are low-risk and carry a government guarantee.
Many Treasury investors were startled when the Fed put in place the half percentage point cut on Tuesday. Expectations had been for a smaller quarter percentage point reduction.
Lower rates were cheered in other markets because they cheapen money and stimulate the economy. But less expensive money also tempts sellers to lift their prices, in turn stimulating inflation. The Treasury market detests inflation because it eats into the value of assets.
Despite Friday's price gains, T.J. Marta, a fixed-income strategist at RBC Capital Markets, predicted that market action in coming sessions will be dominated by the "curve steepening" moves that largely have driven trade since the Federal Reserve cut rates.
"We are mainly seeing selling of the longer-dated maturities," Marta said.
Under a curve steepening strategy, investors put heavy selling pressure on the 30-year long bond and other longer-dated maturities and less pressure on shorter-term assets such as the 2-year note.
The result is that there is a bigger difference between the yields of longer- and shorter-term assets, which restores the motive for lending money for longer periods. These market plays also are a signal that fixed-income market investors expect both higher inflation and further rate cuts.
Heavy selling of Treasurys on Tuesday, Wednesday and Thursday sent yields 3.5 percent higher for the 10-year note and 3.8 percent higher for the 30-year bond on the week, given that price losses fatten yields. These are unusually big moves for Treasury yields and they reflect the fixed-income market's preoccupation that inflation will be exacerbated by rate reductions.
"It has been quite a week and it appears that the back and forth volatility will continue for the days and weeks ahead until the Federal Open Market Committee next meets at the end of October," said Kevin Giddis, managing director of fixed income at Morgan Keegan & Co.
Forex - Canadian dollar moves back above parity vs usd on poor retail sales data
LONDON (Thomson Financial) - The Canadian dollar moved back above parity against its US counterpart after a very weak set of retail sales data for July suggested the strong currency is starting to take its toll on the economy.
Official figures showed retail sales slumped by 0.8 pct in July from June and by 0.3 pct excluding autos, way below forecasts for a modest rebound after falls in June. Statistics Canada said the declines were widespread, though led by the auto sector.
'These numbers even without reading through them are ugly,' said Peter Wadkins at Thomson IFR Markets.
'Traders have been fretting about the impact of the high (Canadian dollar) -- this looks like it,' he added.
In the wake of the data, the US dollar rose back up to a high of 1.0055 against the Canadian dollar from around 1.0011 cad just before the figures were released.
The Canadian currency broke through parity against the dollar last night for the first time since 1976 and today hit a new high of 0.9932. It has gained support from broad dollar weakness as well as sharp gains in the oil price.
At 1.03 pm GMT, the US dollar was trading at 1.0035 cad.
Official figures showed retail sales slumped by 0.8 pct in July from June and by 0.3 pct excluding autos, way below forecasts for a modest rebound after falls in June. Statistics Canada said the declines were widespread, though led by the auto sector.
'These numbers even without reading through them are ugly,' said Peter Wadkins at Thomson IFR Markets.
'Traders have been fretting about the impact of the high (Canadian dollar) -- this looks like it,' he added.
In the wake of the data, the US dollar rose back up to a high of 1.0055 against the Canadian dollar from around 1.0011 cad just before the figures were released.
The Canadian currency broke through parity against the dollar last night for the first time since 1976 and today hit a new high of 0.9932. It has gained support from broad dollar weakness as well as sharp gains in the oil price.
At 1.03 pm GMT, the US dollar was trading at 1.0035 cad.
Market Spotlight: Corporate bonds revive
NEW YORK (AP) - NEW YORK (AP) -- A drowsy corporate bond market roused itself this week, animated by the Federal Reserve's attempt to stimulate the economy with a dramatic half-percentage point cut in benchmark interest rates.
"The corporate bond market is open for business again, after not being open for awhile," said Joe Balestrino, a senior fixed-income portfolio manager at Federated Investment Management. "I wouldn't call it a frenzy, but if you are a corporate Treasurer, this isn't a bad time to buy. I would call it a vibrant market."
The corporate bond market's sudden revival coincided with a massive equities rally that also followed the Tuesday announcement of the first reduction in the Fed funds rate in four years. By contrast, the risk-averse Treasury bond market suffered a severe selloff after the news.
"The difference is that stocks and corporate bonds focus on growth and Treasurys focus on inflation," Balestrino said.
A rate cut in essence makes money cheaper, and the hope is that it will stir economic growth in such varied venues as consumer purchasing, jobs creation, corporate investment and building construction.
But less expensive money also tends to tempt sellers to lift their prices, stimulating inflation.
"For the near-term, the corporate market is just focused on getting liquidity back," said John Atkins, a corporate bond analyst with Ideaglobal.com. "And the spigots have been opened for liquidity."
The usually boisterous corporate bond market all but dried up in early August as investors, rattled by the below-prime mortgage crisis, suddenly shunned the debt of corporate America altogether.
Not only did the market for risky, high-yield junk bonds evaporate, it became much tougher than usual to sell corporate bonds with high, investment grade ratings.
From the start of August until this week, the only junk bond deal to get priced was a foreign deal, a dollar-denominated $1.5 billion offering by Saudi Basic Industries Corp., according to Ideaglobal.com's Atkins. The abandonment of the junk bond market in August clogged the vigorous deal flow in the leveraged buyout market.
But this week saw a number of deals in both the junk bond and investment grade spheres. For example, there was a $1 billion sale of 10-year junk notes by Yellow Pages Publisher R.H. Donnelley. Unexpectedly brisk demand enabled R.H. Donnelley to increase the size of the deal, previously intended to be just $650 million.
"These were the first pricings for U.S. companies in six weeks in the junk market," said Atkins. "That's a welcome sign though it hardly says that things are back to normal. There is at least a sense that markets are functioning, and that is a relief."
The pace of issuance this week quickened for investment grade debt deals, although that market began reviving in early September. This week the London interbank rate, used to price many corporate deals, also was slashed a half point, giving fresh stimulus to the investment grade market.
General Electric Corp., Lehman Brothers Holdings, J.P. Morgan and the Canadian National Railway were among the investment-grade issuers who rushed to market this week.
Federated's Balestrino said he was especially encouraged that the Lehman Brothers offering went well, given that the brokerage's name earlier in the year was tainted by its exposure to the below-prime mortgage sector. "This is a good example of how quickly a recovery can take place," he said. "Earlier Lehman had been the scourge of the market."
Yet Balestrino predicted that there will be further rockiness for the corporate bond market as the year drags on. "I would be hard pressed to say that all it takes is a 50-basis points cut, and the world is suddenly a better place," he said.
Sustained weakness in housing and some likely weak fourth-quarter earnings reports are likely to shake the corporate bond market in coming months, according to Balestrino.
"But for now the rate cuts have enabled the market to snap back," he said.
"The corporate bond market is open for business again, after not being open for awhile," said Joe Balestrino, a senior fixed-income portfolio manager at Federated Investment Management. "I wouldn't call it a frenzy, but if you are a corporate Treasurer, this isn't a bad time to buy. I would call it a vibrant market."
The corporate bond market's sudden revival coincided with a massive equities rally that also followed the Tuesday announcement of the first reduction in the Fed funds rate in four years. By contrast, the risk-averse Treasury bond market suffered a severe selloff after the news.
"The difference is that stocks and corporate bonds focus on growth and Treasurys focus on inflation," Balestrino said.
A rate cut in essence makes money cheaper, and the hope is that it will stir economic growth in such varied venues as consumer purchasing, jobs creation, corporate investment and building construction.
But less expensive money also tends to tempt sellers to lift their prices, stimulating inflation.
"For the near-term, the corporate market is just focused on getting liquidity back," said John Atkins, a corporate bond analyst with Ideaglobal.com. "And the spigots have been opened for liquidity."
The usually boisterous corporate bond market all but dried up in early August as investors, rattled by the below-prime mortgage crisis, suddenly shunned the debt of corporate America altogether.
Not only did the market for risky, high-yield junk bonds evaporate, it became much tougher than usual to sell corporate bonds with high, investment grade ratings.
From the start of August until this week, the only junk bond deal to get priced was a foreign deal, a dollar-denominated $1.5 billion offering by Saudi Basic Industries Corp., according to Ideaglobal.com's Atkins. The abandonment of the junk bond market in August clogged the vigorous deal flow in the leveraged buyout market.
But this week saw a number of deals in both the junk bond and investment grade spheres. For example, there was a $1 billion sale of 10-year junk notes by Yellow Pages Publisher R.H. Donnelley. Unexpectedly brisk demand enabled R.H. Donnelley to increase the size of the deal, previously intended to be just $650 million.
"These were the first pricings for U.S. companies in six weeks in the junk market," said Atkins. "That's a welcome sign though it hardly says that things are back to normal. There is at least a sense that markets are functioning, and that is a relief."
The pace of issuance this week quickened for investment grade debt deals, although that market began reviving in early September. This week the London interbank rate, used to price many corporate deals, also was slashed a half point, giving fresh stimulus to the investment grade market.
General Electric Corp., Lehman Brothers Holdings, J.P. Morgan and the Canadian National Railway were among the investment-grade issuers who rushed to market this week.
Federated's Balestrino said he was especially encouraged that the Lehman Brothers offering went well, given that the brokerage's name earlier in the year was tainted by its exposure to the below-prime mortgage sector. "This is a good example of how quickly a recovery can take place," he said. "Earlier Lehman had been the scourge of the market."
Yet Balestrino predicted that there will be further rockiness for the corporate bond market as the year drags on. "I would be hard pressed to say that all it takes is a 50-basis points cut, and the world is suddenly a better place," he said.
Sustained weakness in housing and some likely weak fourth-quarter earnings reports are likely to shake the corporate bond market in coming months, according to Balestrino.
"But for now the rate cuts have enabled the market to snap back," he said.
Thursday, September 20, 2007
Paulson again downplays credit crisis, expects continued economic growth
WASHINGTON (Thomson Financial) - Just days after the Federal Reserve cut key interest rates in a move to calm the shaky credit and equity markets, US Treasury Secretary Henry Paulson continued to downplay the crisis, telling members of Congress that the US is poised for continued economic growth.
"US economic fundamentals are healthy: unemployment is low, wages are rising and core inflation is contained," Paulson told the House Financial Services Committee today. "Although the recent reappraisal of risk, coupled with weakness in the housing sector, may well result in a penalty, the fundamentals point to continued US economic growth."
Paulson has said previously that the August credit crunch will act as a penalty on growth, but that the US is not headed toward recession.
Paulson added that unlike previous market downturns, turbulence in the markets over the last few weeks was not caused by problems in the "real economy," and instead reflected "excesses in the credit markets."
He also downplayed problems in the subprime mortgage market, saying that US home ownership has increased over the last decade and that home ownership in general is not threatened.
"Even in the current environment, the vast majority of new homeowners will not have difficulty keeping their homes," he said.
The Treasury Secretary also reiterated that borrowers struggling to keep up with their mortgage payments should contact their lenders and try to reschedule their payments. The Bush administration last month encouraged lenders to work out new schedules for some borrowers, and Paulson today asked members of Congress to deliver this message to their constituents.
He also warned that while many subprime borrowers are falling behind, "some prime borrowers with solid credit histories are also struggling."
"US economic fundamentals are healthy: unemployment is low, wages are rising and core inflation is contained," Paulson told the House Financial Services Committee today. "Although the recent reappraisal of risk, coupled with weakness in the housing sector, may well result in a penalty, the fundamentals point to continued US economic growth."
Paulson has said previously that the August credit crunch will act as a penalty on growth, but that the US is not headed toward recession.
Paulson added that unlike previous market downturns, turbulence in the markets over the last few weeks was not caused by problems in the "real economy," and instead reflected "excesses in the credit markets."
He also downplayed problems in the subprime mortgage market, saying that US home ownership has increased over the last decade and that home ownership in general is not threatened.
"Even in the current environment, the vast majority of new homeowners will not have difficulty keeping their homes," he said.
The Treasury Secretary also reiterated that borrowers struggling to keep up with their mortgage payments should contact their lenders and try to reschedule their payments. The Bush administration last month encouraged lenders to work out new schedules for some borrowers, and Paulson today asked members of Congress to deliver this message to their constituents.
He also warned that while many subprime borrowers are falling behind, "some prime borrowers with solid credit histories are also struggling."
Wednesday, September 19, 2007
Forex - Dollar steady at lower levels ahead of US rate verdict
LONDON (Thomson Financial) - The dollar was steady at lower levels against other major currencies ahead of the US rate verdict later tonight where at least a quarter point reduction to 5.00 pct is predicted.
Some chance of a 50 basis point cut to 4.75 pct also remains and against this backdrop investors appear to be tending towards caution.
Michael Carey at Calyon is plumping for a quarter point reduction although he is also banking on the accompanying statement to leave open the possibility of more cuts.
While he expects the base rate to fall to 4.50 pct by year end, he also believes a cut of 50 basis points today would have a whiff of panic, in turn denting overall sentiment by more than necessary.
Indeed, a half point cut will likely hit the dollar.
Over in the UK, the pound was a touch higher after the government pretty much guaranteed all bank deposits late last night in the light of the continued run on ailing Northern Rock.
The news dominated headlines today and on an encouraging note, Northern Rock shares have risen slightly in today's trading.
Analysts are wondering if yesterday's action marks a departure for the Bank of England and a sign that it will embark on greater intervention to address the drying up of liquidity in the system.
This morning, thee Bank of England has offering cash-strapped financial institutions another 4.4 bln stg of reserves in order to deal with short-term liquidity problems that may have been exacerbated by the crisis engulfing Northern Rock PLC.
In an announcement this morning, the central bank said it will be holding at 9 am 'an exceptional fine-tuning Open Market Operation', which will involve offering 4.4 bln of exta reserves in a two-day repo maturing on Thursday at the Bank rate of 5.75 pct.
The central bank said the 4.4 bln stg is equivalent to 25 pct of reserves targets and is in addition to the stg 4.4 bln provided for one week last Thursday.
On the whole the the current crisis is one of confidence and will likely weigh on GDP growth.
'The pound has has actually suffered less than might have been imagined, and an international takeover of Northern Rock could even see the currency bounce,' said Daragh Maher at Calyon said.
'In some respects, the pound's immediate fortunes may rest on the length of queues outside Northern Rock, but with news headlines likely to remain grim, the downside risks for pound will persist,' he added.
Also out today, UK inflation data had some impact after the headline CPI annual rate edged down to 1.8 pct, opening the way for a rate cut which may eventually help UK growth rates.
London 0833 GMT Sydney 0010 GMT
US dollar
yen 115.01 down from 115.04
sfr 1.1872 up from 1.1869
Euro
usd 1.3864 down from 1.3867
yen 159.41 down from 159.53
sfr 1.6455 down from 1.6465
stg 0.6940 down from 0.6959
Sterling
usd 1.9970 up from 1.9935
yen 229.67 up from 229.27
sfr 2.3700 up from 2.3662
Australian dollar
usd 0.8321 down from 0.8340
stg 0.4166 down from 0.4183
yen 95.69 down from 95.970
Some chance of a 50 basis point cut to 4.75 pct also remains and against this backdrop investors appear to be tending towards caution.
Michael Carey at Calyon is plumping for a quarter point reduction although he is also banking on the accompanying statement to leave open the possibility of more cuts.
While he expects the base rate to fall to 4.50 pct by year end, he also believes a cut of 50 basis points today would have a whiff of panic, in turn denting overall sentiment by more than necessary.
Indeed, a half point cut will likely hit the dollar.
Over in the UK, the pound was a touch higher after the government pretty much guaranteed all bank deposits late last night in the light of the continued run on ailing Northern Rock.
The news dominated headlines today and on an encouraging note, Northern Rock shares have risen slightly in today's trading.
Analysts are wondering if yesterday's action marks a departure for the Bank of England and a sign that it will embark on greater intervention to address the drying up of liquidity in the system.
This morning, thee Bank of England has offering cash-strapped financial institutions another 4.4 bln stg of reserves in order to deal with short-term liquidity problems that may have been exacerbated by the crisis engulfing Northern Rock PLC.
In an announcement this morning, the central bank said it will be holding at 9 am 'an exceptional fine-tuning Open Market Operation', which will involve offering 4.4 bln of exta reserves in a two-day repo maturing on Thursday at the Bank rate of 5.75 pct.
The central bank said the 4.4 bln stg is equivalent to 25 pct of reserves targets and is in addition to the stg 4.4 bln provided for one week last Thursday.
On the whole the the current crisis is one of confidence and will likely weigh on GDP growth.
'The pound has has actually suffered less than might have been imagined, and an international takeover of Northern Rock could even see the currency bounce,' said Daragh Maher at Calyon said.
'In some respects, the pound's immediate fortunes may rest on the length of queues outside Northern Rock, but with news headlines likely to remain grim, the downside risks for pound will persist,' he added.
Also out today, UK inflation data had some impact after the headline CPI annual rate edged down to 1.8 pct, opening the way for a rate cut which may eventually help UK growth rates.
London 0833 GMT Sydney 0010 GMT
US dollar
yen 115.01 down from 115.04
sfr 1.1872 up from 1.1869
Euro
usd 1.3864 down from 1.3867
yen 159.41 down from 159.53
sfr 1.6455 down from 1.6465
stg 0.6940 down from 0.6959
Sterling
usd 1.9970 up from 1.9935
yen 229.67 up from 229.27
sfr 2.3700 up from 2.3662
Australian dollar
usd 0.8321 down from 0.8340
stg 0.4166 down from 0.4183
yen 95.69 down from 95.970
Business events scheduled for Wednesday
(AP) - Major business events and economic events scheduled for Wednesday:
WASHINGTON -- Labor Department issues Consumer Price Index for August, 8:30 a.m.
WASHINGTON -- Commerce Department releases housing starts for August, 8:30 a.m.
NEW YORK -- Morgan Stanley releases third-quarter financial results.
MINNEAPOLIS -- General Mills Inc. releases first-quarter financial results.
WASHINGTON -- House Energy and Commerce subcommittee hearing on lead-tainted imports from China. Through Sept. 20.
GRAND JUNCTION, Colo. -- Extradition hearing in Mesa County Court for Norman Hsu, a scandal-plagued Democratic fundraiser with ties to Sen. Hillary Rodham Clinton. Hsu is wanted in California in a grand theft case.
WASHINGTON -- Labor Department issues Consumer Price Index for August, 8:30 a.m.
WASHINGTON -- Commerce Department releases housing starts for August, 8:30 a.m.
NEW YORK -- Morgan Stanley releases third-quarter financial results.
MINNEAPOLIS -- General Mills Inc. releases first-quarter financial results.
WASHINGTON -- House Energy and Commerce subcommittee hearing on lead-tainted imports from China. Through Sept. 20.
GRAND JUNCTION, Colo. -- Extradition hearing in Mesa County Court for Norman Hsu, a scandal-plagued Democratic fundraiser with ties to Sen. Hillary Rodham Clinton. Hsu is wanted in California in a grand theft case.
Monday, September 17, 2007
Forex - Pound drops towards 0.70 per euro mark; dollar steady ahead of FOMC
LONDON, Sep. 17, 2007 (Thomson Financial delivered by Newstex) -- Sterling's woes resulting from worries over the fallout from the Northern Rock crisis continued as the UK currency edged closer to the 0.70 stg per euro mark, a level not seen since April last year.
The pound has come under massive pressure since the news filtered through to markets late last week that Northern Rock had to seek emergency funding from the Bank of England. The pictures of panicked consumers queuing outside branches to withdraw savings has led to speculation of a crisis in consumer confidence and a knock-on effect on the housing market and the economy in general.
Market commentators are now expecting that the Bank of England will cut interest rates sometime over the coming months, a marked contrast to the expectation only a few weeks ago that they would raise rates. By contrast, most market commentators expect that euro zone rates will at least stay unchanged.
'The most obvious cause for this (the spike in euro/sterling) would appear to be the differing outlooks for monetary policy in the euro zone and the UK,' said Simon Derrick at the Bank of New York Mellon. (NYSE:BK)
'The net result of all this has been that euro/sterling has not only now broken out of the narrowing range that had defined trading since 2003 but is also accelerating rapidly. Indeed, last week's move was the largest weekly rally since November of 2005,' he said.
The euro today hit a high of 0.6950 against the pound, its highest level in fourteen months. The pound, meanwhile, also fell below the two dollar mark for the first time since the end of August.
Against other currencies, the dollar was steady after strengthening slightly against the euro and dipping against the yen overnight as market players awaited tomorrow's interest rate decision in the US.
Markets are expecting the Federal Open Market Committee to deliver a 50 basis point rate cut, but some are warning that the Fed could easily disappoint with only a 25 basis point cut.
HBOS analyst Steve Pearson noted that inflation concerns have by no means gone away and the Fed will not want to risk the 'moral hazard' of appearing to bail out those who have made flawed investment decisions.
'The US Federal Reserve and other central banks will have to be cautious. In the context of surging food and energy prices they dare not risk inflation expectations slipping anchor. This means that risk asset markets will not get the full adrenaline shot they are looking for,' he said.
London 1145 GMT London 0821 GMT
US dollar
yen 114.92 down from 114.94
sfr 1.1856 down from 1.1878
Euro
usd 1.3875 up from 1.3866
stg 0.6936 up from 0.6935
yen 159.48 up from 159.44
sfr 1.6454 down from 1.6473
Sterling
usd 2.0003 up from 1.9988
yen 229.84 up from 229.75
sfr 2.3716 down from 2.3742
Australian dollar
usd 0.8412 down from 0.8423
stg 0.4202 down from 0.4211
yen 96.63 down from 96.83
New Zealand dollar
usd 0.7118 up from 0.7116
The pound has come under massive pressure since the news filtered through to markets late last week that Northern Rock had to seek emergency funding from the Bank of England. The pictures of panicked consumers queuing outside branches to withdraw savings has led to speculation of a crisis in consumer confidence and a knock-on effect on the housing market and the economy in general.
Market commentators are now expecting that the Bank of England will cut interest rates sometime over the coming months, a marked contrast to the expectation only a few weeks ago that they would raise rates. By contrast, most market commentators expect that euro zone rates will at least stay unchanged.
'The most obvious cause for this (the spike in euro/sterling) would appear to be the differing outlooks for monetary policy in the euro zone and the UK,' said Simon Derrick at the Bank of New York Mellon. (NYSE:BK)
'The net result of all this has been that euro/sterling has not only now broken out of the narrowing range that had defined trading since 2003 but is also accelerating rapidly. Indeed, last week's move was the largest weekly rally since November of 2005,' he said.
The euro today hit a high of 0.6950 against the pound, its highest level in fourteen months. The pound, meanwhile, also fell below the two dollar mark for the first time since the end of August.
Against other currencies, the dollar was steady after strengthening slightly against the euro and dipping against the yen overnight as market players awaited tomorrow's interest rate decision in the US.
Markets are expecting the Federal Open Market Committee to deliver a 50 basis point rate cut, but some are warning that the Fed could easily disappoint with only a 25 basis point cut.
HBOS analyst Steve Pearson noted that inflation concerns have by no means gone away and the Fed will not want to risk the 'moral hazard' of appearing to bail out those who have made flawed investment decisions.
'The US Federal Reserve and other central banks will have to be cautious. In the context of surging food and energy prices they dare not risk inflation expectations slipping anchor. This means that risk asset markets will not get the full adrenaline shot they are looking for,' he said.
London 1145 GMT London 0821 GMT
US dollar
yen 114.92 down from 114.94
sfr 1.1856 down from 1.1878
Euro
usd 1.3875 up from 1.3866
stg 0.6936 up from 0.6935
yen 159.48 up from 159.44
sfr 1.6454 down from 1.6473
Sterling
usd 2.0003 up from 1.9988
yen 229.84 up from 229.75
sfr 2.3716 down from 2.3742
Australian dollar
usd 0.8412 down from 0.8423
stg 0.4202 down from 0.4211
yen 96.63 down from 96.83
New Zealand dollar
usd 0.7118 up from 0.7116
NY Fed's Sep Mfg Index 14.70 Vs 25.06 In Aug
NEW YORK (Dow Jones)--Manufacturing activity in the New York Federal Reserve district decreased in September, with the overall index slipping to a reading of 14.70 from an unrevised 25.06 in August.
Among the economists who forecast this index, the median expectation of 11 economists surveyed by Dow Jones Newswires was for a reading of 18.00.
The Bank said Monday in its Empire State Manufacturing Survey that "conditions for New York manufacturers continued to improve in September, but at a slower pace than in the past few months." A positive reading indicates an improving manufacturing sector.
The September reading for the new orders index decreased to 13.56 compared with 22.21 in August, while the shipments index eased sharply to 5.09 from 28.82.
The unfilled orders index moved down into negative territory with a reading of -2.13 compared with a positive reading of 1.08 in August. Inventories, meanwhile, moved into positive territory with a reading of 3.19 from a negative reading of -2.15 in August.
The prices paid index edged higher to a reading of 35.11 in September from 34.41, while the prices received index increased to a reading of 11.70 from 3.23 in August. The fact that prices paid is higher than prices received shows that manufacturers are still having trouble fully passing on the higher costs that they confront.
The employment indexes were mixed. The number of employees increased to a reading of 18.22 from 11.62, while the average employee workweek decreased to a reading of 9.57 from 16.13 in August.
The index only began to be compiled in July 2001, but has gained market attention as a precursor of the Philadelphia Fed's manufacturing index (due to be released at 12 p.m. EDT on Thursday), which is itself seen as a proxy for the Institute for Supply Management's national manufacturing survey. On an ISM-equivalent basis the September Empire state index equaled a reading of 54.9, just a bit higher than the actual ISM reading of 52.9 in August.
The index measuring expectations six months from now slipped to a reading of 48.80 from 50.40 in August.
Among the economists who forecast this index, the median expectation of 11 economists surveyed by Dow Jones Newswires was for a reading of 18.00.
The Bank said Monday in its Empire State Manufacturing Survey that "conditions for New York manufacturers continued to improve in September, but at a slower pace than in the past few months." A positive reading indicates an improving manufacturing sector.
The September reading for the new orders index decreased to 13.56 compared with 22.21 in August, while the shipments index eased sharply to 5.09 from 28.82.
The unfilled orders index moved down into negative territory with a reading of -2.13 compared with a positive reading of 1.08 in August. Inventories, meanwhile, moved into positive territory with a reading of 3.19 from a negative reading of -2.15 in August.
The prices paid index edged higher to a reading of 35.11 in September from 34.41, while the prices received index increased to a reading of 11.70 from 3.23 in August. The fact that prices paid is higher than prices received shows that manufacturers are still having trouble fully passing on the higher costs that they confront.
The employment indexes were mixed. The number of employees increased to a reading of 18.22 from 11.62, while the average employee workweek decreased to a reading of 9.57 from 16.13 in August.
The index only began to be compiled in July 2001, but has gained market attention as a precursor of the Philadelphia Fed's manufacturing index (due to be released at 12 p.m. EDT on Thursday), which is itself seen as a proxy for the Institute for Supply Management's national manufacturing survey. On an ISM-equivalent basis the September Empire state index equaled a reading of 54.9, just a bit higher than the actual ISM reading of 52.9 in August.
The index measuring expectations six months from now slipped to a reading of 48.80 from 50.40 in August.
Saturday, September 15, 2007
Dollar Extended Loss, Eyes on Retail Sales
The dollar continues to weaken across the board on expectation that the Fed will cut interest rates by half a percentage point next week. The euro today hovers above 1.3860 and set a record high at 1.3927 versus the dollar. The sterling climbed above 2.03 to test a resistance at 2.0350 against the dollar.
The main focus of the market is still on the US economy. Last Friday‘s weak US non-farm payrolls surprised the market and indicated the impact of credit crunch may spread into every aspect of the nation¡¯s economy. It is widely expected that the Fed may need to lower its benchmark rates on September 18 policy meeting to avoid recession.
The dollar was little changed after US weekly jobless claims came out at 319k, slightly better than the estimate of 325k. Tomorrow will see a bunch of economic data, including Germany August CPI, euro-zone August HICP, Canada July manufacturing shipments, Canada Q2 labor production rate, US retail sales, US import and export prices, US Q2 current account balance, US industrial production, US August Capacity utilization, and University of Michigan consumer sentiment index. US retail sales are seen growing 0.4% in August, versus a 0.3% rise earlier. Excluding autos, core retail sales are expected to rise 0.2%, down from a 0.4% reading in the previous month.
The main focus of the market is still on the US economy. Last Friday‘s weak US non-farm payrolls surprised the market and indicated the impact of credit crunch may spread into every aspect of the nation¡¯s economy. It is widely expected that the Fed may need to lower its benchmark rates on September 18 policy meeting to avoid recession.
The dollar was little changed after US weekly jobless claims came out at 319k, slightly better than the estimate of 325k. Tomorrow will see a bunch of economic data, including Germany August CPI, euro-zone August HICP, Canada July manufacturing shipments, Canada Q2 labor production rate, US retail sales, US import and export prices, US Q2 current account balance, US industrial production, US August Capacity utilization, and University of Michigan consumer sentiment index. US retail sales are seen growing 0.4% in August, versus a 0.3% rise earlier. Excluding autos, core retail sales are expected to rise 0.2%, down from a 0.4% reading in the previous month.
Colombia Stk Index Falls As Investors Sell To Buy Ecopetrol
BOGOTA (Dow Jones)--The Colombian stock index fell as investors are selling shares to buy into state-owned oil company Ecopetrol SA.
The IGBC stock index fell 1.6% to 10,429.67 points, its lowest level since Aug. 22. So far this year, the stock index is down 6.6%.
Colombian investors are selling shares to get cash to buy shares in Ecopetrol, the country's largest privatization ever, said David Rivera, a market analyst with local brokerage Asesores en Valores.
"People are enthusiastic about Ecopetrol, and they're selling other shares, which have performed poorly so far this year," Rivera said.
The government started to sell a 10.1% stake in Ecopetrol on Aug. 27. Institutional and retail investors can buy shares through bank branches, brokerages and even supermarkets.
Additionally, investors are anticipating a rate increase by the central bank's board at its next monetary meeting on Sept. 21, Rivera said.
"Banks would be the first to suffer from higher rates," Rivera said.
The preferred shares of Colombia's largest bank, Bancolombia SA (BCOLOMBIA.BO), fell 2.6% to 16,560 Colombian pesos ($7.77), while its ordinary shares fell 1.7% to COP16,360.
Financial holding company Suramericana de Inversiones SA (SURAMINV.BO), which controls Bancolombia, fell 1.6% to COP18,360.
On the currency market, the Colombian peso strengthened to COP2,130 against the dollar from COP2,141.45 the previous day.
Meanwhile, the yield on the benchmark government peso-denominated bond maturing in 2020 fell to 10.295% from 10.43% on Thursday.
-By Inti Landauro, Dow Jones Newswires; 57-310-867 65 42; colombia@dowjones.com
(END) Dow Jones Newswires
The IGBC stock index fell 1.6% to 10,429.67 points, its lowest level since Aug. 22. So far this year, the stock index is down 6.6%.
Colombian investors are selling shares to get cash to buy shares in Ecopetrol, the country's largest privatization ever, said David Rivera, a market analyst with local brokerage Asesores en Valores.
"People are enthusiastic about Ecopetrol, and they're selling other shares, which have performed poorly so far this year," Rivera said.
The government started to sell a 10.1% stake in Ecopetrol on Aug. 27. Institutional and retail investors can buy shares through bank branches, brokerages and even supermarkets.
Additionally, investors are anticipating a rate increase by the central bank's board at its next monetary meeting on Sept. 21, Rivera said.
"Banks would be the first to suffer from higher rates," Rivera said.
The preferred shares of Colombia's largest bank, Bancolombia SA (BCOLOMBIA.BO), fell 2.6% to 16,560 Colombian pesos ($7.77), while its ordinary shares fell 1.7% to COP16,360.
Financial holding company Suramericana de Inversiones SA (SURAMINV.BO), which controls Bancolombia, fell 1.6% to COP18,360.
On the currency market, the Colombian peso strengthened to COP2,130 against the dollar from COP2,141.45 the previous day.
Meanwhile, the yield on the benchmark government peso-denominated bond maturing in 2020 fell to 10.295% from 10.43% on Thursday.
-By Inti Landauro, Dow Jones Newswires; 57-310-867 65 42; colombia@dowjones.com
(END) Dow Jones Newswires
Friday, September 14, 2007
DATA SNAP: Czech Aug PPI +3.7% On Year Vs Jul +4.1% On Yr -2
DATA SNAP: Czech Aug PPI +3.7% On Year Vs Jul +4.1% On Yr -2
Automotive fuels and other refined oil product prices declined 2.1% on the year in August, compared with a 1.8% annual rise in July.
The PPI data showed the rise in prices in the manufacturing sector, which accounts for the lion's share of the economy, slowed to 3.0% on the year in August from 3.4% in July.
The cost of basic metals and metal processing posted a 6.9% annual rise in August, compared with a 7.7% year-on-year increase in July and an 8.7% annual increase in June, the CSU said.
Regulated energy prices, including electricity, heating and natural gas supplies for households, rose 7.5% on the year in August, a repeat of the rise seen in July.
Meanwhile, prices of electrical and optical equipment gained 1.7% on the year in August following a 1.6% rise in July.
CSU Web site: http://www.czso.cz
-By Sean Carney, Dow Jones Newswires; +420 221 085 272; sean.carney@dowjones.com
(END) Dow Jones Newswires
Automotive fuels and other refined oil product prices declined 2.1% on the year in August, compared with a 1.8% annual rise in July.
The PPI data showed the rise in prices in the manufacturing sector, which accounts for the lion's share of the economy, slowed to 3.0% on the year in August from 3.4% in July.
The cost of basic metals and metal processing posted a 6.9% annual rise in August, compared with a 7.7% year-on-year increase in July and an 8.7% annual increase in June, the CSU said.
Regulated energy prices, including electricity, heating and natural gas supplies for households, rose 7.5% on the year in August, a repeat of the rise seen in July.
Meanwhile, prices of electrical and optical equipment gained 1.7% on the year in August following a 1.6% rise in July.
CSU Web site: http://www.czso.cz
-By Sean Carney, Dow Jones Newswires; +420 221 085 272; sean.carney@dowjones.com
(END) Dow Jones Newswires
EURUSD, GBPUSD. Dollar keeps falling on a background of expectations of drop in FRS rate.
This week the dollar continues to dip, having received a powerful negative impulse. We remind that last week the American investors were shocked twice by record-breaking low indicators on the real estate and on the labor market.
On Wednesday dollar falling in the beginning of the American session a=caused unexpectedly strong reduction in the index of pending home sales in the USA. Within two hours since the beginning of the publication of this negative news on the market of the real estate the dollar lost almost 100 points or about 1 % against euro that is quite strong movement of quotations during one trading session.
Pending Home Sales index of National Association Realtors of the USA, including volumes of pending sales of condominiums and cooperative houses reduced in July to 12,2 interests to 89,9 points. Whereas in June value of this index were up 5 percents to 102,4 points. It is the worst parameter of the index for last six years, in September, 2001 the index showed value of 89,8 points.
And finally the dollar was thrown on Friday after the publication of the report on the labor market of the USA. The dollar falling was provoked by unexpectedly negative news on these data. The sensation was caused by that for the first time for last four years, number of payrolls in the US economy for a month was not increased but decreased!
According to analytical bureau of Department of Labor nonfarm payrolls dipped by 4.000 in August, 2007 in comparison with the growth revised downwardly by 62.000 a month earlier. Analysts predicted growth by 110.000.
As a result forex traders continue to cast dollars during two days of current week. Euro\dollar quotations again have approached the top historical level, to the price of 1,386 dollars for euro.
Among significant news today there is the trade balance report of the US Department for July. Trade deficit was narrowed a little, that is the positive factor for dollar, however these data did not impress traders.
Trade deficit was narrowed to 59,2 billion dollars in July, against 59,4 billion in June. Owing to much weakened dollar export from the USA grows at faster rates, it increased by 2,7 percents in comparison with data for the last month and by 11,3 percents compared with similar parameters of the last year.
The market concentrates its attention on FOMC meeting, co which takes place next week, on September, 18th and where the decision on the basic rate of the Federal Reserve of the USA will be made.
In general, the market makes up its mind that FRS rates will be reduced, there are left less doubts about it. If this time FRS makes this step the differential of FRS and ECB rates again will be reduced that will inevitably affect a dollar exchange rate which by the end of year can reach a level of 1,4 dollars for euro.
On the open positions: stop on euro is placed at 1,3770, in fixed profit, and the pound sterling is kept in break-even.
On Wednesday dollar falling in the beginning of the American session a=caused unexpectedly strong reduction in the index of pending home sales in the USA. Within two hours since the beginning of the publication of this negative news on the market of the real estate the dollar lost almost 100 points or about 1 % against euro that is quite strong movement of quotations during one trading session.
Pending Home Sales index of National Association Realtors of the USA, including volumes of pending sales of condominiums and cooperative houses reduced in July to 12,2 interests to 89,9 points. Whereas in June value of this index were up 5 percents to 102,4 points. It is the worst parameter of the index for last six years, in September, 2001 the index showed value of 89,8 points.
And finally the dollar was thrown on Friday after the publication of the report on the labor market of the USA. The dollar falling was provoked by unexpectedly negative news on these data. The sensation was caused by that for the first time for last four years, number of payrolls in the US economy for a month was not increased but decreased!
According to analytical bureau of Department of Labor nonfarm payrolls dipped by 4.000 in August, 2007 in comparison with the growth revised downwardly by 62.000 a month earlier. Analysts predicted growth by 110.000.
As a result forex traders continue to cast dollars during two days of current week. Euro\dollar quotations again have approached the top historical level, to the price of 1,386 dollars for euro.
Among significant news today there is the trade balance report of the US Department for July. Trade deficit was narrowed a little, that is the positive factor for dollar, however these data did not impress traders.
Trade deficit was narrowed to 59,2 billion dollars in July, against 59,4 billion in June. Owing to much weakened dollar export from the USA grows at faster rates, it increased by 2,7 percents in comparison with data for the last month and by 11,3 percents compared with similar parameters of the last year.
The market concentrates its attention on FOMC meeting, co which takes place next week, on September, 18th and where the decision on the basic rate of the Federal Reserve of the USA will be made.
In general, the market makes up its mind that FRS rates will be reduced, there are left less doubts about it. If this time FRS makes this step the differential of FRS and ECB rates again will be reduced that will inevitably affect a dollar exchange rate which by the end of year can reach a level of 1,4 dollars for euro.
On the open positions: stop on euro is placed at 1,3770, in fixed profit, and the pound sterling is kept in break-even.
Wednesday, September 12, 2007
Moody's: junk defaults to triple
NEW YORK (AP) - Defaults among companies with speculative-grade credit are likely to triple over the next year, underscoring the recent weakness in the debt markets, Moody's Investors Service said Tuesday.
"We think the era of easy access to credit has ended," said Daniel Gates, Moody's chief credit officer for corporate finance in North America, in an interview.
The default rate is expected to climb from 1.4 percent in 2007 to 4.5 percent in 2008 and 5.6 percent in 2009, according to Moody's projections. Default rates would likely climb even higher if the economy were to go into recession, Gates said.
A 4 percent default rate is in line with historical averages. During the most recent downturn in the cycle, default rates reached 11 percent in January 2002.
Investor appetite for speculative-grade debt has all but disappeared in the past two months. The troubles began as delinquencies and defaults among subprime mortgages -- loans given to customers with poor credit history -- rose rapidly.
People became worried bonds backed by those loans would fail, and the problems would spread beyond that market. Now, buyers are avoiding nearly all low-grade investments for fear of default.
That stands in contrast to a period of "easy market access" in 2006 and the first half of 2007, which helped speculative-grade companies refinance or issue new debt at low rates and with looser standards than in the past, Gates said.
"The earlier period of easy market standards may have only postponed the day of reckoning for companies that have persistent negative cash flow or flawed business models," Gates said. Companies with little cash flow and that are highly leveraged are likely to fare the worst, he added.
Many of the defaults in the coming year may be triggered by companies simply running out of cash to sustain their business, because most took advantage of the relaxed financial covenants on their bank credit facilities, Gates said.
During the recent boom, some deals did not even include covenants that, in the past, would often trigger defaults. Such covenants often require specific levels of financial performance from the debt issuer.
Aside from receiving better rates, companies refinancing or issuing debt in 2006 and early 2007 were also able to lock in longer terms, meaning relatively little speculative-grade debt will mature soon. Only $26 billion of speculative-grade debt -- about 2 percent of the outstanding volume -- is scheduled to mature before the end of 2008.
Historically, peak defaults rates come three to four years after an issuance boom, meaning default rates are most likely to peak around 2010.
But they are unlikely to reach the heights of 2001 and 2002, Gates said, because historically low interest rates since then allowed companies to improve profitability and operating cash flow, giving them some flexibility to handle tightening standards.
"We think the era of easy access to credit has ended," said Daniel Gates, Moody's chief credit officer for corporate finance in North America, in an interview.
The default rate is expected to climb from 1.4 percent in 2007 to 4.5 percent in 2008 and 5.6 percent in 2009, according to Moody's projections. Default rates would likely climb even higher if the economy were to go into recession, Gates said.
A 4 percent default rate is in line with historical averages. During the most recent downturn in the cycle, default rates reached 11 percent in January 2002.
Investor appetite for speculative-grade debt has all but disappeared in the past two months. The troubles began as delinquencies and defaults among subprime mortgages -- loans given to customers with poor credit history -- rose rapidly.
People became worried bonds backed by those loans would fail, and the problems would spread beyond that market. Now, buyers are avoiding nearly all low-grade investments for fear of default.
That stands in contrast to a period of "easy market access" in 2006 and the first half of 2007, which helped speculative-grade companies refinance or issue new debt at low rates and with looser standards than in the past, Gates said.
"The earlier period of easy market standards may have only postponed the day of reckoning for companies that have persistent negative cash flow or flawed business models," Gates said. Companies with little cash flow and that are highly leveraged are likely to fare the worst, he added.
Many of the defaults in the coming year may be triggered by companies simply running out of cash to sustain their business, because most took advantage of the relaxed financial covenants on their bank credit facilities, Gates said.
During the recent boom, some deals did not even include covenants that, in the past, would often trigger defaults. Such covenants often require specific levels of financial performance from the debt issuer.
Aside from receiving better rates, companies refinancing or issuing debt in 2006 and early 2007 were also able to lock in longer terms, meaning relatively little speculative-grade debt will mature soon. Only $26 billion of speculative-grade debt -- about 2 percent of the outstanding volume -- is scheduled to mature before the end of 2008.
Historically, peak defaults rates come three to four years after an issuance boom, meaning default rates are most likely to peak around 2010.
But they are unlikely to reach the heights of 2001 and 2002, Gates said, because historically low interest rates since then allowed companies to improve profitability and operating cash flow, giving them some flexibility to handle tightening standards.
Saturday, September 8, 2007
Paulson Retains Positive Economic Outlook
9/7/2007 2:35:17 PM While Wall Street gasped after employment data that left many investors running to fixed income, US Treasury Secretary Henry Paulson merely sighed. Paulson said he does not find Friday's weak report surprising, despite the fact that employment fell by 4,000 jobs in August. Rather, chalking it up to recent strains on the economy.
“There are real strains in the capital markets and across some of the credit markets and I think this will take a while to play out and almost certainly over time this will have an impact on our economy," Mr. Paulson said in an interview on Nightly Business Report on PBS Thursday night.
Paulson reinforced that sentiment earlier today in an interview with Bloomberg television. He downplayed today's report as a surprise piece of data, implying that it is merely a small piece in a larger puzzle full of strong economic data.
“Occasionally, you're going to find some surprises,” Paulson said. “As I said, this was not totally surprising.”
However, last night in the Nightly Business Report interview, Paulson stated that, while there will be penalties, he believes the economy will quickly recover.
"There will be a penalty to our economic growth and I'm quite comfortable that we're going to continue to grow, create jobs," Paulson predicted. He warned that it will take “weeks, maybe a matter of months" to sort out stresses in the capital markets.
Paulson echoed those ideas in his interview with Bloomberg television, remaining optimistic but commenting on the negative impact of the severely lagging housing sector.
"(The housing sector) is going to extract a penalty on growth, and what we're going through in the credit markets is very apt to extract a penalty on growth, but the economy is going to continue to grow in the second half of the year," Paulson told Bloomberg television.
The Labor Department today reported 4,000 fewer jobs in August than there were in July, the first decline in four years. Government jobs fell 28,000, but manufacturing jobs plunged by 46,000. Paulson cited real wage growth and growing US exports and said a strong global economy also gives him confidence that the economic situation would right itself over time.
Overall, Paulson retained his positive outlook, telling Bloomberg “I believe our economy is healthy.” Yet, he rejected criticism that he is slightly too peppy in his outlook, claiming “I never thought of myself as a cheerleader.”
“There are real strains in the capital markets and across some of the credit markets and I think this will take a while to play out and almost certainly over time this will have an impact on our economy," Mr. Paulson said in an interview on Nightly Business Report on PBS Thursday night.
Paulson reinforced that sentiment earlier today in an interview with Bloomberg television. He downplayed today's report as a surprise piece of data, implying that it is merely a small piece in a larger puzzle full of strong economic data.
“Occasionally, you're going to find some surprises,” Paulson said. “As I said, this was not totally surprising.”
However, last night in the Nightly Business Report interview, Paulson stated that, while there will be penalties, he believes the economy will quickly recover.
"There will be a penalty to our economic growth and I'm quite comfortable that we're going to continue to grow, create jobs," Paulson predicted. He warned that it will take “weeks, maybe a matter of months" to sort out stresses in the capital markets.
Paulson echoed those ideas in his interview with Bloomberg television, remaining optimistic but commenting on the negative impact of the severely lagging housing sector.
"(The housing sector) is going to extract a penalty on growth, and what we're going through in the credit markets is very apt to extract a penalty on growth, but the economy is going to continue to grow in the second half of the year," Paulson told Bloomberg television.
The Labor Department today reported 4,000 fewer jobs in August than there were in July, the first decline in four years. Government jobs fell 28,000, but manufacturing jobs plunged by 46,000. Paulson cited real wage growth and growing US exports and said a strong global economy also gives him confidence that the economic situation would right itself over time.
Overall, Paulson retained his positive outlook, telling Bloomberg “I believe our economy is healthy.” Yet, he rejected criticism that he is slightly too peppy in his outlook, claiming “I never thought of myself as a cheerleader.”
Wednesday, September 5, 2007
Exports seen as key driver for economy
WASHINGTON (AP) - A slowdown in manufacturing and construction means the economy needs to rely even more on exports to sustain growth.
Turmoil in the housing and financial markets appears to be spilling over to the broader economy, according to data released Tuesday that showed expansion in the manufacturing sector slowed in August while construction spending dropped sharply in July. Although exports remain a bright spot, analysts don't expect overseas sales to accelerate enough to prevent U.S. economic growth from slowing in the second half of this year.
"The debate is over whether the economy will be soft, very soft, or in recession," said John Shin, a senior economist at Lehman Brothers who forecasts growth to slow to a 2 percent annual rate in the third quarter, down from 4 percent in the second quarter.
The Institute for Supply Management, an organization of corporate purchasing executives based in Tempe, Ariz., said its manufacturing index registered 52.9 in August, down from 53.8 in July and slightly below the expectations of Wall Street economists. Readings above 50 indicate expansion.
The Commerce Department, meanwhile, said construction spending dropped 0.4 percent in July, compared with June, the weakest showing since January. It was a bigger drop than economists had been expecting and underscored the drag the housing slump is having on building activity.
Economists blame the expected weakness later this year on a slowdown in consumer spending, resulting from declining home values and reduced credit availability.
Export growth continues to bolster the manufacturing sector, however, and will counteract some of the effect of the housing slowdown, economists said.
"I think it's going to be a draw," said Mark Zandi, chief economist for Moody's Economy.com, referring to the impact of exports and housing on the economy.
Zandi expects that exports will be even more important next year, as the impact of the housing slump declines and global economic growth continues to increase demand for U.S. goods overseas.
U.S. manufacturers of aircraft, medical devices and agricultural and construction equipment will continue to benefit from a weak U.S. dollar, economists said, which makes U.S. goods less expensive abroad.
Boeing Co., for example, expects to deliver 515 to 520 planes next year, with approximately 70 percent going overseas, said Jim Proulx, a company spokesman. That's up from the 440 to 445 the company is on track to deliver this year.
Construction and agricultural equipment maker Deere & Co. said last month that its third-quarter profit jumped 23 percent on strong international sales.
Approximately 30 percent of the farm and construction equipment made in the United States is for export, according to Tom Runiewicz, industrial economist at consulting firm Global Insight.
The ISM survey found that manufacturing exports remained healthy, with the new export orders index increasing to 57 from 56.5 in July.
There were several other positive signs for the economy in the ISM survey. The production and employment indices increased, while new orders declined but remained above 50.
"Overall, this report reinforces other indicators showing modest but uneven growth across the manufacturing sector," David Resler, chief economist at Nomura Securities, wrote in a research note.
The stock markets reacted positively, as investors decided that several aspects of the manufacturing report make it more likely that the Federal Reserve will cut interest rates at its next meeting Sept. 18.
The Dow rose 117.87 points to 13,475.61, the Nasdaq up 43.05 to 2,639.41 and the S&P 500 up 19.49 to 1,493.48.
The ISM's prices paid index dropped to 63 from 65, its fourth consecutive month of decline. That could indicate that "inflation concerns are cooling off," Shin said, which could enable the Federal Reserve to cut rates at its next meeting Sept. 18.
At the same time, the ISM index isn't high enough to indicate runaway growth, which would give the Fed pause, he said.
"When you add it all up, it's more encouraging news for a market that's really anticipating a rate cut in a couple of weeks," Shin added.
The market is discounting the July construction spending data, he said, because it is a month old and reflects the well-known difficulties in housing.
The ISM new orders index came in at 55.3, below July's reading of 57.5, while the production index registered 56.1, an increase from 55.6 in July.
Turmoil in the housing and financial markets appears to be spilling over to the broader economy, according to data released Tuesday that showed expansion in the manufacturing sector slowed in August while construction spending dropped sharply in July. Although exports remain a bright spot, analysts don't expect overseas sales to accelerate enough to prevent U.S. economic growth from slowing in the second half of this year.
"The debate is over whether the economy will be soft, very soft, or in recession," said John Shin, a senior economist at Lehman Brothers who forecasts growth to slow to a 2 percent annual rate in the third quarter, down from 4 percent in the second quarter.
The Institute for Supply Management, an organization of corporate purchasing executives based in Tempe, Ariz., said its manufacturing index registered 52.9 in August, down from 53.8 in July and slightly below the expectations of Wall Street economists. Readings above 50 indicate expansion.
The Commerce Department, meanwhile, said construction spending dropped 0.4 percent in July, compared with June, the weakest showing since January. It was a bigger drop than economists had been expecting and underscored the drag the housing slump is having on building activity.
Economists blame the expected weakness later this year on a slowdown in consumer spending, resulting from declining home values and reduced credit availability.
Export growth continues to bolster the manufacturing sector, however, and will counteract some of the effect of the housing slowdown, economists said.
"I think it's going to be a draw," said Mark Zandi, chief economist for Moody's Economy.com, referring to the impact of exports and housing on the economy.
Zandi expects that exports will be even more important next year, as the impact of the housing slump declines and global economic growth continues to increase demand for U.S. goods overseas.
U.S. manufacturers of aircraft, medical devices and agricultural and construction equipment will continue to benefit from a weak U.S. dollar, economists said, which makes U.S. goods less expensive abroad.
Boeing Co., for example, expects to deliver 515 to 520 planes next year, with approximately 70 percent going overseas, said Jim Proulx, a company spokesman. That's up from the 440 to 445 the company is on track to deliver this year.
Construction and agricultural equipment maker Deere & Co. said last month that its third-quarter profit jumped 23 percent on strong international sales.
Approximately 30 percent of the farm and construction equipment made in the United States is for export, according to Tom Runiewicz, industrial economist at consulting firm Global Insight.
The ISM survey found that manufacturing exports remained healthy, with the new export orders index increasing to 57 from 56.5 in July.
There were several other positive signs for the economy in the ISM survey. The production and employment indices increased, while new orders declined but remained above 50.
"Overall, this report reinforces other indicators showing modest but uneven growth across the manufacturing sector," David Resler, chief economist at Nomura Securities, wrote in a research note.
The stock markets reacted positively, as investors decided that several aspects of the manufacturing report make it more likely that the Federal Reserve will cut interest rates at its next meeting Sept. 18.
The Dow rose 117.87 points to 13,475.61, the Nasdaq up 43.05 to 2,639.41 and the S&P 500 up 19.49 to 1,493.48.
The ISM's prices paid index dropped to 63 from 65, its fourth consecutive month of decline. That could indicate that "inflation concerns are cooling off," Shin said, which could enable the Federal Reserve to cut rates at its next meeting Sept. 18.
At the same time, the ISM index isn't high enough to indicate runaway growth, which would give the Fed pause, he said.
"When you add it all up, it's more encouraging news for a market that's really anticipating a rate cut in a couple of weeks," Shin added.
The market is discounting the July construction spending data, he said, because it is a month old and reflects the well-known difficulties in housing.
The ISM new orders index came in at 55.3, below July's reading of 57.5, while the production index registered 56.1, an increase from 55.6 in July.
Virtual Bernanke guides 'Second Life'
NEW YORK (AP) - Just before U.S. financial markets were roiled by a global credit squeeze this summer, an equally dramatic financial crisis threatened "Second Life," the much-hyped online world.
On July 25, the company controlling "Second Life" announced that it would no longer allow gambling. Economic activity was cut by nearly half as gambling halls shut down.
That's a recipe for disaster in any economy, with job losses and a possible currency collapse, but the online world stayed on an even keel. That's in part due to the fact that few people make a living there, but also to the firm grip on its currency market by "Second Life's" equivalent of Ben Bernanke, chairman of the Federal Reserve.
It's just one example of how economists and virtual worlds are teaming up, to mutual benefit. Outside "Second Life," a game company just hired its first full-time economist. Another economist, coming from the academic side, believes that just as virtual economies need economists, so economists need virtual economies -- to experiment with.
The "Second Life" equivalent of Bernanke is John Zdanowski. He's the chief financial officer at Linden Lab, the privately held company that runs the world. Using "Second Life" software, he spoke to The Associated Press as an "avatar," or 3-D representation, in Linden Lab's virtual headquarters.
Before the gambling crackdown, visitors (or as the company calls them, "residents") exchanged about 2 million U.S. dollars a day in "Second Life." That dropped to $1 million shortly after.
Gambling wasn't quite as important to the world's economy as those figures indicate, Zdanowski said. "Second Life" is considerably more than an online Las Vegas -- it's a place for socializing, sex games, advertising and other activities enabled by a world where residents can, with sufficient skill, create almost anything they want out of thin air.
Gambling inflated the economic activity because it meant small amounts of money changed hands relatively quickly, often several times a day, like at a poker table.
But the gambling shutdown was still a potential problem for economy, because "Second Life" has its own currency. The Linden dollar is convertible to U.S. dollars at an ostensibly floating exchange rate.
Losing even 10 or 20 percent of its real economy set it up for a currency crisis, as gamblers and gambling hall operators tried to cash in their gains for U.S. dollars and put their money to use elsewhere.
If the exchange rate started to plummet, remaining, non-gambling residents would also feel compelled to trade their virtual dollars for real ones, making the currency nearly worthless. Zimbabwe is currently struggling with that kind of hyperinflation. But in "Second Life," that's not what happened.
"The reason it hasn't hit the exchange rate is that we were exercising one of the controls we have," Zdanowski said.
Noticing that residents' behavior is strongly affected by the direction of the exchange rate, Linden Lab has for more than a year put a ceiling to the value of its currency. It's done that by selling Linden dollars on the currency exchange for around 270 to the U.S. dollar, and that's where the exchange rate has stayed since then. In a year, the company has made about $5 million on this trade.
Like China, "we basically manage the supply of our currency so that the exchange rate stays fixed against the U.S. dollar," Zdanowski said.
With visitors taking money out of the world because of the gambling shutdown, Linden Lab simply stopped selling its currency to compensate for the greater supply of Linden dollars for sale on the exchange.
If the supply needs to be reduced further, for instance if the popularity of "Second Life" starts declining, Linden Lab could introduce other measures, Zdanowski said. It could start accepting Linden dollars rather than U.S. dollars for some of the monthly fees it charges "landowners" in the world. That gives the company a very effective, but costly, way to soak up money.
However, Linden Lab doesn't guarantee the value of the Linden dollar -- it could simply decline to spend money to prop up the virtual currency.
Eve Online, an online science-fiction game run by CCP hf of Iceland, has avoided some of the complications of having an online currency by banning its conversion to real money. Yet the company this summer hired its first full-time economist to keep tabs on what goes on inside the game.
"My job will be to disseminate good-quality, consistent information for the player base so they can make their decisions on production and mining and market rates," said Eyjolfur Gudmundsson, who has a Ph.D. from the University of Rhode Island.
The game has about 200,000 players, who form corporations, organize banks and even defraud one another. Gudmundsson will be looking at whether CCP should facilitate the formation of more complex financial institutions, like banks.
He also hopes to cultivate relationships with real-world academic institutions that want to use Eve Online for their research and teaching.
"One example can be that business students always have to develop a business or strategic plan in their studies. But they very rarely get the opportunity of actually following it through. Within a virtual economy, that would be no problem," said Gudmundsson.
Ted Castronova, an economist at Indiana University in Bloomington, is working on a related project: a virtual world based on the works of William Shakespeare, to be used as a "sandbox" to try different ideas in economy, sociology and political science.
In contrast to sciences like physics and medicine, where research is based on experiments, "in the social sciences, we have endless argument, with nobody every coming to firm conclusions" about large-scale things like the best way to run a country, said Castronova.
"There's nothing but fighting about stuff like `how high should the overall income tax rate be for an entire economy?' No one has done controlled experiments on that question."
Castronova envisions running two or more copies of "Arden: The World of William Shakespeare" and varying conditions slightly between them to study the differences. For instance, he believes the worlds could be used to study the effect of money supply on interest rates.
"I think virtual worlds make it possible that in the next three or four hundred years we could see advances in social science like we've seen in the natural sciences in the past 300 years," Castronova said.
Funded by a MacArthur Foundation "genius" grant, "Arden" is in its early testing stages. Among its economically focused characters is, of course, Shylock, the Merchant of Venice.
On July 25, the company controlling "Second Life" announced that it would no longer allow gambling. Economic activity was cut by nearly half as gambling halls shut down.
That's a recipe for disaster in any economy, with job losses and a possible currency collapse, but the online world stayed on an even keel. That's in part due to the fact that few people make a living there, but also to the firm grip on its currency market by "Second Life's" equivalent of Ben Bernanke, chairman of the Federal Reserve.
It's just one example of how economists and virtual worlds are teaming up, to mutual benefit. Outside "Second Life," a game company just hired its first full-time economist. Another economist, coming from the academic side, believes that just as virtual economies need economists, so economists need virtual economies -- to experiment with.
The "Second Life" equivalent of Bernanke is John Zdanowski. He's the chief financial officer at Linden Lab, the privately held company that runs the world. Using "Second Life" software, he spoke to The Associated Press as an "avatar," or 3-D representation, in Linden Lab's virtual headquarters.
Before the gambling crackdown, visitors (or as the company calls them, "residents") exchanged about 2 million U.S. dollars a day in "Second Life." That dropped to $1 million shortly after.
Gambling wasn't quite as important to the world's economy as those figures indicate, Zdanowski said. "Second Life" is considerably more than an online Las Vegas -- it's a place for socializing, sex games, advertising and other activities enabled by a world where residents can, with sufficient skill, create almost anything they want out of thin air.
Gambling inflated the economic activity because it meant small amounts of money changed hands relatively quickly, often several times a day, like at a poker table.
But the gambling shutdown was still a potential problem for economy, because "Second Life" has its own currency. The Linden dollar is convertible to U.S. dollars at an ostensibly floating exchange rate.
Losing even 10 or 20 percent of its real economy set it up for a currency crisis, as gamblers and gambling hall operators tried to cash in their gains for U.S. dollars and put their money to use elsewhere.
If the exchange rate started to plummet, remaining, non-gambling residents would also feel compelled to trade their virtual dollars for real ones, making the currency nearly worthless. Zimbabwe is currently struggling with that kind of hyperinflation. But in "Second Life," that's not what happened.
"The reason it hasn't hit the exchange rate is that we were exercising one of the controls we have," Zdanowski said.
Noticing that residents' behavior is strongly affected by the direction of the exchange rate, Linden Lab has for more than a year put a ceiling to the value of its currency. It's done that by selling Linden dollars on the currency exchange for around 270 to the U.S. dollar, and that's where the exchange rate has stayed since then. In a year, the company has made about $5 million on this trade.
Like China, "we basically manage the supply of our currency so that the exchange rate stays fixed against the U.S. dollar," Zdanowski said.
With visitors taking money out of the world because of the gambling shutdown, Linden Lab simply stopped selling its currency to compensate for the greater supply of Linden dollars for sale on the exchange.
If the supply needs to be reduced further, for instance if the popularity of "Second Life" starts declining, Linden Lab could introduce other measures, Zdanowski said. It could start accepting Linden dollars rather than U.S. dollars for some of the monthly fees it charges "landowners" in the world. That gives the company a very effective, but costly, way to soak up money.
However, Linden Lab doesn't guarantee the value of the Linden dollar -- it could simply decline to spend money to prop up the virtual currency.
Eve Online, an online science-fiction game run by CCP hf of Iceland, has avoided some of the complications of having an online currency by banning its conversion to real money. Yet the company this summer hired its first full-time economist to keep tabs on what goes on inside the game.
"My job will be to disseminate good-quality, consistent information for the player base so they can make their decisions on production and mining and market rates," said Eyjolfur Gudmundsson, who has a Ph.D. from the University of Rhode Island.
The game has about 200,000 players, who form corporations, organize banks and even defraud one another. Gudmundsson will be looking at whether CCP should facilitate the formation of more complex financial institutions, like banks.
He also hopes to cultivate relationships with real-world academic institutions that want to use Eve Online for their research and teaching.
"One example can be that business students always have to develop a business or strategic plan in their studies. But they very rarely get the opportunity of actually following it through. Within a virtual economy, that would be no problem," said Gudmundsson.
Ted Castronova, an economist at Indiana University in Bloomington, is working on a related project: a virtual world based on the works of William Shakespeare, to be used as a "sandbox" to try different ideas in economy, sociology and political science.
In contrast to sciences like physics and medicine, where research is based on experiments, "in the social sciences, we have endless argument, with nobody every coming to firm conclusions" about large-scale things like the best way to run a country, said Castronova.
"There's nothing but fighting about stuff like `how high should the overall income tax rate be for an entire economy?' No one has done controlled experiments on that question."
Castronova envisions running two or more copies of "Arden: The World of William Shakespeare" and varying conditions slightly between them to study the differences. For instance, he believes the worlds could be used to study the effect of money supply on interest rates.
"I think virtual worlds make it possible that in the next three or four hundred years we could see advances in social science like we've seen in the natural sciences in the past 300 years," Castronova said.
Funded by a MacArthur Foundation "genius" grant, "Arden" is in its early testing stages. Among its economically focused characters is, of course, Shylock, the Merchant of Venice.
Monday, September 3, 2007
European govt bonds remain lower as risk appetite picks up
LONDON (Thomson Financial) - European government bonds remained lower as risk appetite picked up, with equities rising and bonds losing some of their safe haven appeal, though trade was nervous ahead of Thursday's interest rate decisions in Europe and the UK.
With the US closed for the Labor Day holiday, investors are continuing to digest Friday's comments by Federal Reserve chairman Ben Bernanke and US President George W Bush, which helped to restore some calm to financial markets.
"It's still very much a question of the level of risk appetite. Bernanke and Bush reassured everyone and investors are a little more comfortable with risk at this stage - equities have picked up and bonds are losing a little of their safe haven appeal," said Audrey Childe-Freeman at CIBC World Markets.
Bernanke told the annual monetary policy symposium in Jackson Hole on Friday that the Fed is ready to "act as needed" to prevent the credit crisis from spilling through into the wider economy, sparking hopes for a cut in interest rates to follow the recent reduction in the deposit rate.
Bush then announced a plan to help borrowers facing trouble paying their mortgages.
Markets remain nervous, however, ahead of Thursday's interest rate decisions, Childe-Freeman noted.
Both the ECB and the BoE are forecast to leave interest rates unchanged given the recent turbulence on financial markets. Both had previously been broadly expected to deliver quarter point rises prior to the credit crisis.
The BoE, however, is unlikely to release a statement to accompany the decision and focus will centre on ECB president Jean-Claude Trichet's accompanying press conference.
Trichet will have to backtrack after previously signalling a rate hike through his reference to the need for "strong vigilance" on inflation risks, though the focus will centre on whether or not he signals that interest rates are still likely to rise.
"Another omission of 'strong vigilance' in the comments this week may be interpreted as though the Bank is prepared to delay a hike indefinitely, if indeed it hikes at all," said Calyon fixed income analyst Orlando Green.
Even in this scenario, however, the ECB could still indicate a further hike in between its press conferences, though this would be "subject to healthier market conditions".
Over in the UK, gilts were also lower and slightly underperforming their European counterparts after a survey showed manufacturing activity in the UK surged to its highest rate in over three years.
UK manufacturing PMI jumped to 56.3, its highest level since June 2004, while July's reading was revised to 55.9 from 55.7 previously, well above expectations for a fall to 55.0.
Today's numbers are unlikely to alter expectations that the Bank of England will leave interest rates unchanged at Thursday's meeting given recent market uncertainty and weak inflation numbers in July, though it may increase the chances of an interest rate rise some time over the months to come.
"The overall strong tone of the manufacturing survey is a reminder that the UK economy is still performing pretty well overall at the moment, and that an eventual further interest rate hike is still very possible despite the current turmoil in global credit and financial markets," said Howard Archer at Global Insight.
Among other data released today, the euro zone's PMI index on manufacturing activity for August was revised up to 54.3 from 54.2 in the provisional estimate but remains down on the 54.9 recorded in July. The revision still leaves the index at its weakest for over a year and a half.
At Yield Change on
1554 BST pct previous close
Sept euribor future (Liffe) 95.32 dn 0.04
Dec euribor future (Liffe) 95.47 dn 0.04
GERMANY
Sept bund future (Eurex) 113.49 dn 0.28
3.75 pct Jul 2017 govt bond 99.77 4.27 dn 0.30
FRANCE
3.75 pct Apr 2017 govt bond 95.24 4.36 dn 0.27
ITALY
4.00 pct Feb 2017 govt bond 96.25 4.54 dn 0.25
UK
Sept gilt future 106.64 dn 0.36
4.00 pct Sept 2016 govt bond 92.24 5.08 dn 0.37
Sept short sterling future 93.37 dn 0.06
Dec short sterling future 93.64 dn 0.05
jessica.mortimer@thomson.com
jkm/slm
With the US closed for the Labor Day holiday, investors are continuing to digest Friday's comments by Federal Reserve chairman Ben Bernanke and US President George W Bush, which helped to restore some calm to financial markets.
"It's still very much a question of the level of risk appetite. Bernanke and Bush reassured everyone and investors are a little more comfortable with risk at this stage - equities have picked up and bonds are losing a little of their safe haven appeal," said Audrey Childe-Freeman at CIBC World Markets.
Bernanke told the annual monetary policy symposium in Jackson Hole on Friday that the Fed is ready to "act as needed" to prevent the credit crisis from spilling through into the wider economy, sparking hopes for a cut in interest rates to follow the recent reduction in the deposit rate.
Bush then announced a plan to help borrowers facing trouble paying their mortgages.
Markets remain nervous, however, ahead of Thursday's interest rate decisions, Childe-Freeman noted.
Both the ECB and the BoE are forecast to leave interest rates unchanged given the recent turbulence on financial markets. Both had previously been broadly expected to deliver quarter point rises prior to the credit crisis.
The BoE, however, is unlikely to release a statement to accompany the decision and focus will centre on ECB president Jean-Claude Trichet's accompanying press conference.
Trichet will have to backtrack after previously signalling a rate hike through his reference to the need for "strong vigilance" on inflation risks, though the focus will centre on whether or not he signals that interest rates are still likely to rise.
"Another omission of 'strong vigilance' in the comments this week may be interpreted as though the Bank is prepared to delay a hike indefinitely, if indeed it hikes at all," said Calyon fixed income analyst Orlando Green.
Even in this scenario, however, the ECB could still indicate a further hike in between its press conferences, though this would be "subject to healthier market conditions".
Over in the UK, gilts were also lower and slightly underperforming their European counterparts after a survey showed manufacturing activity in the UK surged to its highest rate in over three years.
UK manufacturing PMI jumped to 56.3, its highest level since June 2004, while July's reading was revised to 55.9 from 55.7 previously, well above expectations for a fall to 55.0.
Today's numbers are unlikely to alter expectations that the Bank of England will leave interest rates unchanged at Thursday's meeting given recent market uncertainty and weak inflation numbers in July, though it may increase the chances of an interest rate rise some time over the months to come.
"The overall strong tone of the manufacturing survey is a reminder that the UK economy is still performing pretty well overall at the moment, and that an eventual further interest rate hike is still very possible despite the current turmoil in global credit and financial markets," said Howard Archer at Global Insight.
Among other data released today, the euro zone's PMI index on manufacturing activity for August was revised up to 54.3 from 54.2 in the provisional estimate but remains down on the 54.9 recorded in July. The revision still leaves the index at its weakest for over a year and a half.
At Yield Change on
1554 BST pct previous close
Sept euribor future (Liffe) 95.32 dn 0.04
Dec euribor future (Liffe) 95.47 dn 0.04
GERMANY
Sept bund future (Eurex) 113.49 dn 0.28
3.75 pct Jul 2017 govt bond 99.77 4.27 dn 0.30
FRANCE
3.75 pct Apr 2017 govt bond 95.24 4.36 dn 0.27
ITALY
4.00 pct Feb 2017 govt bond 96.25 4.54 dn 0.25
UK
Sept gilt future 106.64 dn 0.36
4.00 pct Sept 2016 govt bond 92.24 5.08 dn 0.37
Sept short sterling future 93.37 dn 0.06
Dec short sterling future 93.64 dn 0.05
jessica.mortimer@thomson.com
jkm/slm
Irish Energy Regulator: Gas Prices To Fall 10.6% From Oct 1
Irish Energy Regulator: Gas Prices To Fall 10.6% From Oct 1
DUBLIN (Dow Jones)--Ireland's Commission for Energy Regulation said Monday that gas prices will fall 10.6% from Oct. 1.
The commission already cut gas prices this year, by 10% from Feb. 1.
The commission said the decision was driven by the fall in wholesale gas prices during 2007 and a significant reduction in gas network costs after a review of the Gas Board's revenues.
Economists say this year's price reductions - the latest of which is aimed to cut gas bills by EUR100 a year for an average user in a three-bedroom house - will help ease inflation, which hit 5.0% in July.
-By Quentin Fottrell, Dow Jones Newswires; +353-1-6762189; quentin.fottrell®dowjones.com
DUBLIN (Dow Jones)--Ireland's Commission for Energy Regulation said Monday that gas prices will fall 10.6% from Oct. 1.
The commission already cut gas prices this year, by 10% from Feb. 1.
The commission said the decision was driven by the fall in wholesale gas prices during 2007 and a significant reduction in gas network costs after a review of the Gas Board's revenues.
Economists say this year's price reductions - the latest of which is aimed to cut gas bills by EUR100 a year for an average user in a three-bedroom house - will help ease inflation, which hit 5.0% in July.
-By Quentin Fottrell, Dow Jones Newswires; +353-1-6762189; quentin.fottrell®dowjones.com
Sunday, September 2, 2007
Weekly wrap up: Rupee returns to 40/USD mark on robust economic growth
The Indian Rupee inched up on Monday (August 27) on the expectation of capital inflow in Indian stocks on possible US Fed rate cut that would be undertaken to ease the credit condition in the global market.
The Rupee ended at 41.01/02 a Dollar, up from Friday`s close of 41.0825/0925.
The Indian unit weakened on Tuesday (August 28) on higher demand for US currency by the oil-importing companies, who came under pressure of higher crude oil prices globally. Moreover, risk-aversed investors stayed away from the local assets, on uncertainty created by the global credit crunch, caused by US sub-prime mortgage losses and on-going tussles over Indo-US nuclear deal.
The Rupee ended at 41.165/175 a Dollar, weaker than Monday`s 41.01/02.
The Indian currency received support on Wednesday (August 29) from a rise in Indian equities which raised optimism that the foreign investors will return to Indian stocks. The Rupee also drew support from the U.S. stock futures which gained on the back of investors` interest on buying stocks with low share price. The sentiments overweighed the fears of global liquidity condition triggered by sub-prime mortgage losses, and Dollar selling by Indian exporters to book the profit with the depreciating Rupee.
The Rupee closed at 41.105/115 a Dollar, slightly stronger than Tuesday`s finish of 41.165/175.
The Indian Rupee however reversed its earlier trend on Thursday, (August 30) on fears of capital outflows that would be sparked by possible slowdown in global credit markets. Additionally, Dollar demand by oil importers to pay their bills, put pressure on the unit.
The Rupee settled at 41.16/17 a Dollar, weaker than Wednesday`s close of 41.105/115.
The Rupee gained on Friday (August 31) helped by a sound Indian economic growth which would lead to capital inflows. The official data released, showed that India`s GDP grew 9.3% in first quarter of the current fiscal. Moreover, the local unit was also tracked by Asian stocks, which climbed on expectations that subprime mortgage crisis and the following credit crunch situation will normalize, as the US President George W. Bush was expected to announce measures to help subprime-mortgage borrowers.
The Rupee closed the week at 40.875/885 a Dollar, stronger by 0.7% from Thursday`s close of 41.16/17.
The Rupee ended at 41.01/02 a Dollar, up from Friday`s close of 41.0825/0925.
The Indian unit weakened on Tuesday (August 28) on higher demand for US currency by the oil-importing companies, who came under pressure of higher crude oil prices globally. Moreover, risk-aversed investors stayed away from the local assets, on uncertainty created by the global credit crunch, caused by US sub-prime mortgage losses and on-going tussles over Indo-US nuclear deal.
The Rupee ended at 41.165/175 a Dollar, weaker than Monday`s 41.01/02.
The Indian currency received support on Wednesday (August 29) from a rise in Indian equities which raised optimism that the foreign investors will return to Indian stocks. The Rupee also drew support from the U.S. stock futures which gained on the back of investors` interest on buying stocks with low share price. The sentiments overweighed the fears of global liquidity condition triggered by sub-prime mortgage losses, and Dollar selling by Indian exporters to book the profit with the depreciating Rupee.
The Rupee closed at 41.105/115 a Dollar, slightly stronger than Tuesday`s finish of 41.165/175.
The Indian Rupee however reversed its earlier trend on Thursday, (August 30) on fears of capital outflows that would be sparked by possible slowdown in global credit markets. Additionally, Dollar demand by oil importers to pay their bills, put pressure on the unit.
The Rupee settled at 41.16/17 a Dollar, weaker than Wednesday`s close of 41.105/115.
The Rupee gained on Friday (August 31) helped by a sound Indian economic growth which would lead to capital inflows. The official data released, showed that India`s GDP grew 9.3% in first quarter of the current fiscal. Moreover, the local unit was also tracked by Asian stocks, which climbed on expectations that subprime mortgage crisis and the following credit crunch situation will normalize, as the US President George W. Bush was expected to announce measures to help subprime-mortgage borrowers.
The Rupee closed the week at 40.875/885 a Dollar, stronger by 0.7% from Thursday`s close of 41.16/17.
SKorean fair trade commission says conglomerates run by small stakeholders
SYDNEY Thomson Financial - Economic growth in Pacific rim countries will increase emissions of the greenhouse gases blamed for global warming by 130 percent by 2050, a new Australian study released Sunday predicts.
But cleaner and more advanced technologies would slash the pollution scientists say could lead to increasingly wild weather and environmental disaster, the government's Bureau of Agricultural and Resource Economics said.
The study was presented by Prime Minister John Howard at a news conference to coincide with a week of meetings leading up to a summit of the 21-member Asia Pacific Economic Cooperation (APEC) forum.
It is based on a projection that APEC economies will grow by an average of 3.0 percent a year, with a resulting increase in energy consumption of around 140 percent.
Fossil fuels which produce greenhouse gases provide the bulk of APEC energy and are projected to continue to do so through to 2050, the study says.
"If current policy settings are continued, it is projected that energy supply in the APEC region in 2050 will be sourced from: coal 29 percent, oil 31 percent, gas 25 percent, nuclear nine percent, hydroelectricity two percent and biomass and other renewables four percent."
The introduction of cleaner and more advanced energy efficient and lower emission technologies would enable APEC countries to reduce emissions while maintaining economic growth, the study said.
"Primary energy consumption under an 'enhanced technology' development and deployment scenario is projected to be about 32 percent lower in APEC economies at 2050 than would otherwise be the case.
"Use of advanced technologies is projected to reduce APEC greenhouse gas emissions by 49 percent relative to the reference case at 2050."
APEC leaders will debate climate change at their summit on Sept 8-9, but Howard warned that they will not set any binding targets for reducing emissions.
But cleaner and more advanced technologies would slash the pollution scientists say could lead to increasingly wild weather and environmental disaster, the government's Bureau of Agricultural and Resource Economics said.
The study was presented by Prime Minister John Howard at a news conference to coincide with a week of meetings leading up to a summit of the 21-member Asia Pacific Economic Cooperation (APEC) forum.
It is based on a projection that APEC economies will grow by an average of 3.0 percent a year, with a resulting increase in energy consumption of around 140 percent.
Fossil fuels which produce greenhouse gases provide the bulk of APEC energy and are projected to continue to do so through to 2050, the study says.
"If current policy settings are continued, it is projected that energy supply in the APEC region in 2050 will be sourced from: coal 29 percent, oil 31 percent, gas 25 percent, nuclear nine percent, hydroelectricity two percent and biomass and other renewables four percent."
The introduction of cleaner and more advanced energy efficient and lower emission technologies would enable APEC countries to reduce emissions while maintaining economic growth, the study said.
"Primary energy consumption under an 'enhanced technology' development and deployment scenario is projected to be about 32 percent lower in APEC economies at 2050 than would otherwise be the case.
"Use of advanced technologies is projected to reduce APEC greenhouse gas emissions by 49 percent relative to the reference case at 2050."
APEC leaders will debate climate change at their summit on Sept 8-9, but Howard warned that they will not set any binding targets for reducing emissions.
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