Thread: OcaFX.Com - Financial News and Analysis

Yen rises after no surprises from BOJ



TOKYO (Reuters) - The yen rose against the dollar and other major currencies on Tuesday after the Bank of Japan refrained from taking drastic easing steps after a two-day policy meeting.


The dollar fell to around 82.10 yen from around 82.35 yen following the BOJ's decision.


While few expected fresh easing, market players were nervous after the central bank surprised the market by boosting asset purchases last month.


Mar 13, 2012 05:32
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Dollar stronger across the board, hits 11-mth high vs yen



TOKYO (Reuters) - The dollar hit an 11-month high against the yen and 1-month high on the euro on Wednesday, extending its gains after a modest brightening of the Federal Reserve's economic forecasts nudged traders to downplay expectations of further monetary easing.


U.S. 2-year Treasury yields hit a 7-1/2-month high after solid retail sales data, making the dollar less attractive as a funding currency for carry trades. Tokyo exporters were also reluctant to sell it now, expecting more strength, traders said.


These factors saw the dollar hit a session high at 83.32 yen, its highest level since mid-April, with most traders expecting a short correction soon, before refocusing on last year's high at 85.53 yen.


The move in the yields was essential for the dollar rally to continue, said Sumino Kamei, senior currency analyst at the Bank of Tokyo-Mitsubishi UFJ in Tokyo.


Recent easing steps by the Bank of Japan, the country's trading deficit amid surging demand for fossil fuels in the wake of the nuclear crisis have also helped the dollar rise a staggering 9 percent on the yen since the beginning of February.


We are getting to a point where people will be looking for a trigger to take profits on this rise. There aren't many scheduled events that could prop it further, while risks -- most notably elevated oil prices -- loom large.
But investors said that a pullback in the dollar would likely be limited to the mid-82 area with the previous high of 82.65 lending support. Longer term, they were mostly bullish, with Barclays Capital raising its three month target to 88 yen.


The U.S. unit gained also against all other currencies, with its index hitting a 7-1/2-week high of 80.42 <.DXY>.


Hot on the heels of Friday's encouraging U.S. jobs report, a strong 1.1 percent rise in retail sales provided fresh evidence of improvement in the world's largest economy.


Acknowledging this trend, the Fed slightly upgraded its outlook, expecting moderate growth over coming quarters and a gradual decline in the unemployment rate, although it said the jobless rate remains elevated.


There is nothing for risky assets not to love about the Fed stance; either the economic outlook will continue to improve, or the Fed will take action to inject more liquidity into markets, said Julia Coronado, BNP Paribas chief economist for North America.


Mar 14, 2012 07:03
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Australian Dollar Falls Without Regard to Rising Inflation Expectation


The Australian Dollar dismissed rising expectations for consumer inflation as overall risk appetite continued to deteriorate, pushing the currency downward.


THE TAKEAWAY: Aussie Consumer Inflation Expectation Rose to 2.7% from 2.5% > Market Risk Aversion in the Face of Slowing Chinese Growth Poor for Aussie Dollar > AUDUSD Continued to Fall

Data released by the Melbourne Institute of Applied Economic and Social Research showed that Australian inflation expectations rose this month. The country’s consumers expected price levels to rise to 2.7 percent for the month of March, up from 2.5 percent during February.


The Australian Dollar has been trending downwards this month as overarching risk appetite has moved traders away from the Aussie. Recent negative growth estimates in China have tempered appetites for the currency. China is Australia’s largest consumer of mining and construction exports, and slower Chinese economic growth equates to a decline in demand for Aussie goods. Contracting demand for Australian exports would hurt to country’s manufacturing and mining sectors, and the Australian dollar would suffer as a result.


The inflation estimates have hovered in between the 2.4 percent to 2.8 percent range for the last five months, and March’s figure certainly continues the pattern. Markets appeared unaffected by the data, and the AUDUSD continued its slow trend downward.


Mar 15, 2012 01:24
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LME copper slips on firmer dollar, Shanghai rises



SINGAPORE (Reuters) - London copper futures edged lower on Friday, hurt by a firmer dollar, after rising more than 1 percent in the previous session on a tighter global supply outlook.


FUNDAMENTALS
* Three-month copper on the London Metal Exchange dropped $22 to $8,543 a tonne by 0119 GMT. But the metal is up marginally for the week so far, its third gain in four weeks.


* The most-traded June copper contract on the Shanghai Futures Exchange gained 0.7 percent to 60,850 yuan ($9,600) a tonne, chasing Thursday's gains in London.


* Freeport McMoran Copper & Gold Inc said first-quarter copper output would be down by about 10 percent because of labor-related problems at its Grasberg mine in Indonesia which will not return to full production until the second quarter.


* LME copper has risen more than 12 percent so far this year, benefitting, like other risk assets, from increased liquidity across markets as central banks around the world ease credit curbs to spur economic growth.


* Copper's price gain comes despite a shaky outlook for demand from top consumer China. Premier Wen Jiabao said on Wednesday China must embrace slower growth and bolder political reform to keep its economy from faltering, and also dampened hopes for any near-term relaxation of curbs in the property sector.


* Aurubis , Europe's biggest copper producer, is confident of strong copper demand from China this year despite forecasts of slower growth in the country.


* RUSAL Plc <0486.HK>, the world's largest aluminum company, is expected to pick a new chairman on Friday to steady a ship still rocking from the parting shot fired by Viktor Vekselberg, who said it was in "deep crisis".


* For the top stories in metals and other news, click , or
MARKETS NEWS


* The dollar rose against a basket of currencies <.DXY>, with the greenback's upward momentum seen intact amid a brightening U.S. outlook.
* The S&P 500 closed above 1,400 for the first time since the 2008 financial crisis on Thursday as stocks resumed the upward climb that has produced a steady stream of gains this year. <.N>


* U.S. crude futures rose on Friday, after dropping for two straight sessions, as robust economic data in the world's top oil consumer countered news that the United States and Britain were preparing a release from strategic oil stocks this year.


Mar 16, 2012 02:56
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Euro, shares dip as growth worries revive


LONDON (Reuters) -The euro dipped to just below recent highs and European stocks fell on Tuesday amid concern about the scale of China's growth slowdown, while investors eyed crucial talks between Italy's government and unions on labor reforms.
Prime Minister Mario Monti's meeting with union bosses could make or break his brief tenure as head of a government struggling to pay down massive debts and find ways to revive an economy in which factory output has fallen sharply.
Ahead of the meeting, equity investors were trimming positions after shares rose to eight-month peaks on signs of a recovery in the giant U.S. economy and after big improvements in corporate balance sheets.
"Strategically, I am bullish on equities," Neil Dwane, chief investment officer for Europe at Allianz Global Investors/RCM, said.
"The thing is that they have rallied quite a long way, so it's harder to be as confident when you think: have we solved any of the economic issues?"
The FTSE Eurofirst 300 <.FTEU3> was down 0.5 percent at 1,099.71 points after snapping a four-session winning streak on Monday that saw it touch levels last seen in July.
Traders' growing nervousness about the outlook could be seen in the Euro STOXX 50 volatility index <.V2TX>, a key gauge of sentiment, which jumped 4.3 percent after three days of falls. The higher the volatility index, the lower the investor appetite to take on more risk.
RECOVERY HOPES IN THE BALANCE
Meanwhile U.S. Treasury yields, which have risen sharply in the past week on the improved U.S. economic outlook and reduced expectations of further monetary easing in the near term, also dipped on Tuesday but the fall was expected to be short lived.
"I think that movement (in U.S. Treasury yields)...is definitely a confirmation that the market is switching much more in terms of its mentality towards a recovery mentality," Graham Neilson, chief investment strategist at Cairn Capital said.
"I think yields are going to go higher from here as well."
The 10-year U.S. Treasury yield, which moves inversely to price, stood at 2.35 percent after rising as high as 2.392 percent on Monday, its highest level since late October.


German government bond yields followed Treasuries and dipped slightly as investors were lured back into the market after 10-year yields broke last week above 2 percent, the upper end of the year's trading range to that point.
Among the weaker euro zone economies, Italian bonds rose on wariness about the labor talks, and 10-year yields were last up 4.2 bps at 4.88 percent.
The equivalent Spanish yield was up 4 bps at 5.21 percent after ratings agency Moody's said Spain's fiscal outlook remained challenging despite recently softened deficit targets.
Commodities were broadly weaker, with base and precious metals both edging down after the worries about a sharp slowdown in China grew when BHP Billiton , the world's biggest miner, noted signs of "flattening" iron ore demand there.
Earlier this month China cut its 2012 growth target to an eight-year low of 7.5 percent, fuelling caution about demand for natural resources and heightening fears the euro zone crisis would hit global growth.


Mar 20, 2012
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Dollar gains broadly as growth currencies slip




LONDON (Reuters) -The dollar index climbed against a basket of currencies on Tuesday, helped by higher U.S. Treasury yields, while growth-linked currencies came under pressure from concerns China's demand for raw materials could be slowing.
Global miner BHP Billiton said it saw signs growth in iron ore demand was flattening in China, Australia's single biggest export market, pushing the Australian dollar more than 1 percent lower on the day to $1.0488.
"The (U.S.) dollar looks better bid against the euro and the yen. Interest rate expectations do seem to be gaining a bit more traction on the currency," said Daragh Maher, currency strategist at HSBC.
"But it strikes me the move in the Australian dollar may be a bit overdone. I would think it's a good idea to buy Aussie on these dips."
The dollar index <.DXY> rose 0.3 percent to 79.692, recovering from a one-week low hit the previous day. Analysts said much of the greenback's recent surge was due to improving U.S. data and a modest brightening of the U.S. Federal Reserve's economic outlook in its latest policy statement.
That spurred a rise in U.S. Treasury yields as investors scaled back expectations of further quantitative easing in the near term, and prompted some speculation the Fed may tighten monetary policy earlier than it had pledged.
The 10-year U.S. Treasury yield rose to as high as 2.392 percent on Monday, its highest level since late October. The two-year Treasury yield was last trading at roughly 0.367 percent, in sight of last week's peak of 0.414 percent which was the highest since late July.
But some strategists said the move in the greenback and U.S. Treasury yields could soon run out of steam.
"The recent dollar rally has been based on unrealistic expectations for U.S. rates and I don't think it is well founded," said Adam Cole, global head of FX strategy at RBC Capital Markets.
"The market is priced for rate hikes much earlier than the FOMC (Federal Open Market Committee) has indicated."
ITALY TALKS EYED
The euro eased 0.3 percent to $1.3196, slipping away from a one-week high near $1.3266 hit on Monday and below support from the 100-day moving average around $1.3199.
Some investors were cautious about pushing the shared currency higher ahead of talks between Italy's government and unions on reforms seen as key to turning around the euro zone's third largest economy and paying down massive debts.
There have been some signs of stabilization in the euro zone sovereign bond market this year, with the 10-year Italian government bond yield spread over German Bunds standing at 286 basis points on Tuesday, down from 535 basis points on January 9.
But concerns remained that Portugal may eventually need to restructure its debt like Greece, prompting another flare up in the crisis, while Italy is potentially a far bigger worry.
Moves in the dollar versus the yen picked up in European trade after a quiet Asian session when Japanese financial markets were closed for a national holiday.




Mar 20, 2012 09:17
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Copper falls on China demand concerns, dollar strength


LONDON (Reuters) - Copper fell on Tuesday as the dollar strengthened and equities markets retreated and after BHP Billiton , the world's biggest miner, raised concerns about the possibility of a sharp slowdown in iron ore demand from top metals consumer China.
Three-month copper on the London Metal Exchange was $8,408 per ton in official rings from a close of $8,570 on Monday. It was down more than 2 percent after U.S. housing data, before recouping some of those losses.
U.S. housing starts fell last month, but permits for future construction jumped to their highest level since October 2008, according to a government report that showed steady improvement in the housing market.
"There is a big difference between permits being awarded, and building taking place, but the housing data should be notionally positive," Citi analyst David Wilson said.
"There are still concerns that China is slowing and not consuming as much copper, that's definitely been an issue," he added.
The metal, used extensively in construction, hit its highest in two weeks at $8,690 on Friday and is up more than 12 percent this year, but has struggled to breach that level.
"It's choppy within a range. It's partly dollar strength, but also I suspect a rather more cautious commentary from BHP," BNP Paribas analyst Stephen Briggs said.
"There is a slowing trend in China...moving increasingly away from the growth model that they have had, which may be a little less metals intensive. This is not new, but recognition by big mining companies would have had an effect."
Australian iron ore miners, key beneficiaries of China's modern-day industrial revolution, signaled on Tuesday demand growth was finally slowing in response to Beijing's moves to cool its economy.
BHP Billiton said it was seeing signs of "flattening" iron ore demand from China, though for now it was pushing ahead with ambitious plans to expand production.
Official Chinese data last week showed home prices fell in February from January for a fifth consecutive month, and the government reaffirmed its commitment to measures to control the property market to cool speculation.
China accounts for 40 percent of global refined copper demand. Copper is used mostly in building construction and power.
Demand in the world's biggest copper consumer has not picked up after the Lunar New Year holiday in late January, prompting importers to delay some term shipments, traders have said.
The dollar rose against a basket of currencies, supported by safe-haven demand as risk sentiment soured, partly because of concerns that a slowdown in China could hit global growth. <.DXY>
Gains in the dollar can pressure dollar-denominated commodities by making them more expensive for consumers using other currencies.
European stocks fell on the scale of China's growth slowdown, and investors eyed talks between Italy's government and unions on reforms seen key to turning around the euro zone's third-largest economy.
Nickel, used in steelmaking, was $18,825 in rings from $19,050 at Monday's close. It is the worst performing base metal in the complex so far this year, and is up around 1.6 percent, compared with copper's 12 percent rise.
"Exchange inventories have risen over 8 percent and Chinese premiums remain weak," RBC Base Metals said about nickel in a research note. "That said, a move below $18,000 will begin to see a supply-side response."


Zinc, used to galvanize steel, was untraded in rings, but bid at $2,041 from $2,079.
Tin, also untraded, was bid at $23,200 from $23,595, lead was bid at $2,062 from $2,108. Aluminum was $2,239 in rings from $2,275.


LME aluminum stocks are near record highs at more than 5 million ton, but most of the metal is locked up in financing deals and not available for sale.
The large stockpile, and the economic slowdown in Europe, has hurt aluminum prices, spurring global producers such as Rio Tinto , Alcoa and Norsk Hydro , to cut production.
Metal Prices at 1337 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
Metal Last Change Pct Move End 2010 Ytd Pct
move
COMEX Cu 382.80 -7.90 -2.02 444.70 -13.92
LME Alum 2243.00 -32.00 -1.41 2470.00 -9.19
LME Cu 8400.00 -170.00 -1.98 9600.00 -12.50
LME Lead 2057.00 -51.00 -2.42 2550.00 -19.33
LME Nickel 18806.00 -244.00 -1.28 24750.00 -24.02
LME Tin 23251.00 -344.00 -1.46 26900.00 -13.57
LME Zinc 2036.25 -42.75 -2.06 2454.00 -17.02
SHFE Alu 16265.00 -10.00 -0.06 16840.00 -3.41
SHFE Cu* 60350.00 50.00 +0.08 71850.00 -16.01
SHFE Zin 15885.00 10.00 +0.06 19475.00 -18.43 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07






Mar 20, 2012 10:13
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China growth worries weigh on stocks, boost Treasuries



NEW YORK (Reuters) - Renewed concerns about China's economic growth weighed on global stocks on Tuesday, giving a boost to safe-haven U.S. government bonds and the dollar.


U.S. crude oil prices dropped nearly 2 percent as increased supply from Saudi Arabia and a return to pre-war exports from Libya eased pressure on the market.
Concerns about the scale of China's economic slowdown resurfaced as BHP Billiton , the world's largest miner, said it was seeing signs of "flattening" iron ore demand from the country.


U.S. stock indexes traded more than half a percentage point lower after a rally on Monday drove the S&P 500 to a level less than 10 percent shy of its 2007 all-time high.
"It seems like a market that probably just needs to take a rest, but I wouldn't be surprised (if) we rally into the day," said Jack Ablin, chief investment officer at Harris Private Bank in Chicago.


"It is now a focus back on the fundamentals on the economy and those news items aren't quite as daunting. It's really just fine tuning."
The Dow Jones industrial average (DJI:DJI) was down 66.41 points, or 0.50 percent, at 13,172.72. The Standard & Poor's 500 Index <.SPX> was down 6.54 points, or 0.46 percent, at 1,403.21. The Nasdaq Composite Index (NAS:COMP) was down 20.25 points, or 0.66 percent, at 3,058.07.
The S&P 500 has gained more than 11 percent so far this year as a steady flow of strong U.S. economic data encouraged stock investors. Tuesday's U.S. housing data was mixed, however, with housing starts falling in February, but permits for future construction jumping to the highest level since October 2008.
World stocks measured by the MSCI All-Country World Index <.MIWD00000PUS> dropped 0.76 percent, after closing on Monday near levels last seen in late July.
In Europe, the FTSEurofirst 300 index <.FTEU3> fell 0.9 percent as autos and miners were hit by worries of a Chinese economic slowdown.


"Stocks are being driven down on reports of major discounts amongst the luxury good car brands in China and comments about weak iron ore demand," said Richard Batty, strategist at Standard Life Investments, with $248.37 billion of assets under management.


The dollar rose 0.1 percent against a basket of major trading-partner currencies, according to the U.S. Dollar Index <.DXY>, as Chinese economic worries weighed on growth-related currencies.
The euro, however, was stable against the greenback at $1.3233.
U.S. crude oil prices dropped 1.6 percent to $106.78 a barrel, also pressured by the strength of the dollar, which makes the commodity more expensive to non-U.S. investors.


Benchmark 10-year Treasury notes were trading 1/32 higher in price to yield 2.37 percent, down from 2.38 percent late Monday, while 30-year bonds gained 11/32 to yield 3.46 percent, down from 3.48 percent. hitting a 2-1/2 week high of 79.739.


Mar 20, 2012 10:42
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FOREX: Pound Aiming Higher Against Euro, Yen on BOE Minutes Result






The British Pound is likely to rise against the Euro and Japanese Yen if the BOE meeting minutes show fewer calls for additional QE at the March meeting.


Talking Points

• Pound to Rise Against Euro, Yen if BOE Minuets Show Dovish Camp Shrank
• Dollar May Rise Alongside Stocks as US Existing Home Sales Hit 22-Month High
• Minneapolis Fed’s Kocherlakota Says Stimulus Unwind May Come in 2012-13

Minutes from the March meeting of the Bank of England headline the economic calendar in European hours. The outcome may prove narrowly supportive for the British Pound in that the ultra-dovish voting pattern seen in February is unlikely to be repeated this time around. While it wasn’t surprising to see perennial dove Adam Posen vote for an increase in asset purchases, the addition of David Miles to calls for more stimulus was significant. This produced a 7-2 tally in favor of the status quo but planted expectations of an apparently growing pro-QE insurgency.


In March, Mr Posen may have found himself alone once more as UK economic data broadly performed at its best since May 2010 relative to expectations. If the vote count is revealed at 7-1 or even the unlikely 7-0, traders are likely to reduce bets on further QE over the near term and offer Sterling a boost, with outsized gains expected against the Euro and Japanese Yen (where monetary policy is likely to be least supportive over the coming months). The updated UK Budget is also set to be presented to Parliament. A smaller deficit is likely to reduce bond issuance expectations and lift Gilt yields, encouraging the Pound higher in the process, and vice versa.




On the sentiment front, S&P 500 stock index futures are pushing firmly higher, hinting risk appetite is likely to be well-supported heading into the opening bell on Wall Street as traders await US Existing Home Sales figures, where forecasts point to the highest reading in 22 months at 4.61 million. What this means for the US Dollar is no longer as clear-cut as it has been even recently however. Indeed, as we observed last week, supportive economic news has been able to produce gains for the S&P 500 and the greenback alike, reflecting the recent responsiveness of Fed officials to the apparently firming recovery.


Thegreenbackcorrected lower against its major counterparts in overnight trade as the benchmark currency digested recent gains. USD added 0.5 percent on average yesterday as fears of a slowdown in China and its impact on global output at large stoked safe-haven demand. Hawkish comments from Minneapolis Fed President Narayana Kocherlakota – who served on the rate-setting FOMC in 2011 before rotating out this and who thereby is surely familiar with most inner workings of current policy – likewise helped. Kocherlakota said the Fed may begin to unwind monetary stimulus as soon as this year or in 2013.





Mar 21, 2012 08:21
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Euro gains versus yen, steady against dollar






NEW YORK (Reuters) - The euro reached a near five-month high versus the yen and held steady against the dollar on Wednesday as the Greek bailout appeared to progress, prompting some investors to pare back bets against the single currency.


Many analysts said the approval had been seen as a formality but signs the Greek bailout was on track boosted the euro zone common currency.
Further gains could be capped if a stronger dollar trend driven by higher Treasury yields reasserts itself. The euro could run out of steam above $1.33, especially if euro zone purchasing managers surveys on Thursday come in weak.
The euro rose to an almost two-week high of $1.3284, according to Reuters data, after Greece's lawmakers approved the country's second bailout deal, as expected. It was last little changed at $1.3224.
"Greek parliamentary support for the new 130-billion-euro bailout package is encouraging"," said Camilla Sutton, chief currency strategist at Scotia Capital in Toronto. "Tomorrow's PMIs will be important, as recent data has pointed to some stability in several European economies and the PMI will help confirm this, which would be positive for the euro."
Technical analysts said the euro rally was likely to run out of steam around $1.33, just above the 61.8 percent retracement of its late February to mid-March fall.


"There has been an easing in general concerns about euro zone liquidity and the creditworthiness of euro zone banks, plus euro short positions can carry on being unwound," said Adrian Schmidt, currency strategist at Lloyds in London.
He saw potential for the euro to rise towards $1.35 against the dollar, around the top of its recent range, although short-term resistance at $1.3320 may prove too high a hurdle if Thursday's preliminary PMI data comes in weak.
Investors remained wary of the risk of another flare-up in the euro zone debt crisis. Greece got its first batch of bailout payments this week, but the Italian government looked set to clash with unions over employment law reforms.
A firmer dollar, due to fading expectations of more monetary easing by the U.S. Federal Reserve after a modest brightening of its economic outlook, may also hamper the euro.


Ten-year U.S. Treasury yields were last trading around 2.3393 percent, within sight of a near five-month high touched this week.
U.S. housing data, due at 10 a.m. EDT (1400 GMT), could boost the dollar if it adds to expectations that growth in the world's largest economy is picking up.


WEAK YEN, UK BUDGET
Rising U.S. yields and monetary easing from the Bank of Japan last month have boosted the dollar, particularly against the yen. The greenback rose 0.4 percent to 84.02 yen, just shy of an 11-month high touched last week.
During the Asian session Japanese exporters were seen selling the dollar ahead of the end of their financial year on March 31, but market players said there was good demand to buy the greenback on dips.
The euro also hit a near five-month peak of 111.43 yen, according to Reuters data, nearing resistance around the peak hit on October 31, when Japanese authorities last intervened in the market. It was last at 111.07, up 0.3 percent.


Mar 21, 2012 12:19
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