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UK Manufacturers Expect Pace of Decline In Output To Slow: CBI Survey
Wednesday, the latest monthly Industrial Trends survey from the Confederation of British Industry showed that 17% of the 575 firms surveyed expect the output volume to increase over the next three months, while 34% anticipate a fall. However, the resulting balance of minus 17% was a marked improvement on the previous month's balance of minus 32%.
Thus, firms expect the pace of decline in output to slow significantly in the next quarter, indicating that they believe the toughest phase of the recession may be behind them.
Ian McCafferty, the CBI's Chief Economic Adviser said, "After scaling back production very sharply at the beginning of the year, manufacturers can see a glimmer at the end of the tunnel. They still expect manufacturing activity to fall, but at a much slower rate over the next few months."
The survey found that a balance of 56% reported a below normal order books in May. The CBI said export order books remained below par this month despite the relative weakness of sterling.
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Dollar Slumps To New Multi-month Lows Against Euro And Franc
In early European deals on Thursday, the dollar slipped to new multi-month lows against its European and Swiss counterparts as fresh concerns about the strength of global recovery resurfaced.
Yesterday, the Federal Reserve lowered its forecast of U.S. economic growth for the next three years. Minutes from its April meeting showed the Fed projected the world's biggest economy to contract by up to 2 percent this year with the unemployment rate rising to as high as 9.6 percent.
They also showed that Fed policymakers had considered buying more securities to spur recovery, a move that would inject more dollars into the market.
At the April meeting the FOMC voted unanimously to keep the target range between 0 and 0.25 percent. In the accompanying statement the FOMC noted that "the economy has continued to contract, though the pace of contraction appears to be somewhat slower."
"Although the economic outlook has improved modestly since the March meeting, partly reflecting some easing of financial market conditions, economic activity is likely to remain weak for a time," the statement read.
Once again, the FOMC said that interest rates will remain exceptionally low for some time, adding that they will "employ all available tools to promote economic recovery and to preserve price stability."
A disappointing 2009 outlook from ***************, the world's biggest PC maker, also fanned concerns about corporate profits in a slowing economy.
The dollar, which closed yesterday's trading at 1.1003 against the Swiss franc, fell to a new multi-month low of 1.0962 during early deals on Thursday. The next downside target level for the U.S. currency is seen at 1.07.
In early trading on Thursday, the dollar weakened to 1.3840 against the euro. This set the lowest point for the dollar since January 05. On the downside, 1.40 is seen as the next target level for the dollar. At Wednesday's close, the euro-dollar pair was quoted at 1.3781.
At 4:55 am ET Thursday, the dollar spiked up to 1.5518 against the pound, moving from a new multi-month low of 1.5819 hit in early Asian deals today. If the dollar gains further, it may likely target the 1.535 level. The pound-dollar pair was worth 1.5755 at Wednesday's close.
The pound plummeted after the Standard & Poor's revised the outlook on the U.K. to negative from stable. The rating agency affirmed 'AAA' long-term and 'A-1+' short-term sovereign credit ratings.
Standard & Poor's credit analyst David Beers said, "We have revised the outlook on the U.K. to negative due to our view that, even assuming additional fiscal tightening, the net general government debt burden could approach 100% of GDP and remain near that level in the medium term."
Rating outlooks assess the potential direction of a rating, typically over a period of up to two years.
In economic news, U.K.'s retail sales rose 0.9% in April from the previous month, larger than the expected increase of 0.5%. On a yearly basis, sales grew 2.6%, while economists were looking for a 2.4% rise.
Against the Japanese yen, the dollar is presently trading at 94.97, up from a new multi-month low of 94.31 hit at 9:25 pm ET Wednesday. The next upside target level for the dollar-yen pair is seen at 95.5.
An index measuring tertiary industrial activity in Japan fell a seasonally adjusted 4.0 percent in March compared to the previous month, the Ministry of Economy, Trade and Industry said today, posting a score of 100.8.
That was sharply lower than analyst expectations that had called for a 1.5 percent monthly decline following the revised 1.3 percent monthly easing in February.
Investors are now likely to focus on the North American session, in which the U.S. leading indicator for April, Philadelphia Federal Reserve's manufacturing survey data for May and the weekly jobless claims report for the week ended May 16 are expected.
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European Economics Preview: German Ifo Business Confidence Due
Monday, German Ifo business confidence survey is the only major report due from the European economies.
At 2.00am ET, the Statistics Estonia is scheduled to release the foreign trade data for March. The trade deficit stood at EEK 1.1 billion in February, smaller than the EEK 1.57 billion deficit in January.
At 3.00am ET, a slew of statistical reports are due. Hungarian retail sales are forecast to drop 3.5% annually in March, larger than the 3.2% decline seen in February. Meanwhile, Czech consumer confidence and Spanish PPI are also due.
At 4.00am ET, a monthly business confidence survey is due from the Munich-based Ifo Institute for Economic Research. German business confidence is seen at 84.9 in May, up from 83.7 in April. Meanwhile, the expectations index is forecast to rise to 85.4 from 83.9 and current assessment to improve to 84.5 from 83.6.
The Hungarian Central Bank is set to announce the interest rate decision at 8.00am ET. The central bank is widely expected to hold the base rate at 9.5%.
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British pound falls to 4-day low against US dollar as stocks Drop
During early European deals on Tuesday, the British pound declined to a 4-day low against the US dollar as Britain's top share index fell 0.8 percent in early today with investors nervous after reports that North Korea fired more short range missiles, denting oil and metal prices and pressuring commodity stocks.
The pound also showed weakness against other major currencies. The British currency thus fell from an Asian session's 4-day high against the European currency and the Swiss franc.
By 4:57 am Eastern Time, the FTSE 100 .FTSE was down 36.45 points at 4,328.84 after gaining 0.5 percent on Friday. The index is down 2.1 percent this year, but has gained over 25 percent since touching a six-year trough on March 9.
Against the US dollar, the British pound traded down during early deals on Tuesday. At 5:00 am ET, the pound-dollar pair touched a 4-day low of 1.5781, compared to 1.5911 hit late New York Monday. If the pair falls further, 1.553 is seen as the next target level.
The British currency that closed Monday's North American session at 0.8812 against the European currency reached a 4-day high of 0.8776 at 2:05 am ET Tuesday. Thereafter, the pound reversed its direction and is currently trading at 0.8795 against the euro with 0.892 seen as the next target level.
Germany's gross domestic product posted its sharpest decline since records began in 1970 on weak investment activity and a sharp drop in net exports.
The German economy contracted 3.8% on a sequential basis in the first quarter, the Federal Statistical Office said in a detailed report today. The first-quarter drop in GDP marked an unprecedented fourth successive quarterly contraction for Germany's economy.
In the fourth quarter of 2008, the gross domestic product had slipped 2.2%. Compared with the first quarter of 2008, GDP decreased a price-adjusted 6.7% in the first quarter of 2009, much larger than the 1.7% drop seen in the fourth quarter. When calendar-adjusted, the economic performance went down 6.9%.
Elsewhere, a consumer climate survey by market research firm GfK Group revealed that German consumer sentiment remained unchanged in May amid the economic crisis. The survey's forward-looking overall indicator showed a value of 2.5 points for June, matching May's reading.
Economic expectations improved slightly for the second month in a row. The corresponding indicator showed a reading of minus 28.3 points in May, up 2.9 points from previous month.
UK's sterling lost ground after hitting a 4-day high of 1.7305 against the Swiss franc at 2:05 am ET Tuesday, The pound-franc pair is currently trading at 1.7255, compared to Monday's closing value of 1.7230. The next downside target level for the pair is seen around 1.704.
Switzerland's employment growth slowed in the first quarter and the UBS Consumption indicator declined in April.
The Swiss Federal Statistical Office announced that the employment increased 0.8% year-on-year in the first quarter, slower than the 1.6% in the previous quarter. Economists were looking for a decline of 0.1%.
The employment level stood at 3.957 million in the first quarter, down from 3.963 million in the preceding quarter. Economists had predicted the employment level at 3.92 million.
The UBS said its consumption indicator for Switzerland fell slightly to 0.92 in April from 0.99 in March, resuming the downtrend after a rise in March. The indicator has thus remained below its long-term average of 1.50 for seven months.
The British pound that climbed to 151.20 against the Japanese yen at 2:00 am ET Tuesday weakened thereafter. The pound-yen pair thus dropped to 149.61 at 4:40 am ET. On the downside, 146 is seen as the next target level for the British currency. The pair closed Monday's New York deals at 150.90.
A report released by Japan's Finance Ministry showed that Japan's net external assets as at the end of 2008 were down 9.9% year-over-year at 225.51 trillion yen due to the strengthening yen. The Bank of Japan's corporate service price index report for April showed a 0.2% monthly drop and a 2.4% year-over-year decline. Annually, prices have shown a negative trend since October 2008.
Traders are now likely to focus on the North American session, in which the S&P/Case-Shiller home price index is scheduled for release at 9 am ET. Economists expect an 18.4% year-over-year decline in the 20-city composite house price index for March.
At 10:00 am ET, the Conference Board is scheduled to release its consumer confidence report for May. The survey, which is based on a survey of 5,000 US households, is expected to show that the consumer confidence index rose to 42 in May.
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US Dollar falls To New Multi-month Lows Against Euro, Pound And Franc
Monday, the U.S. dollar headed south to new multi-month lows against its European, Swiss and UK counterparts as investor risk appetite dampened demand for the safe-haven greenback and boosted higher yielding currencies.
The dollar fell as General Motors is expected file for bankruptcy protection today, which would be the biggest industrial bankruptcy in the history of the U.S., in a deal that will give taxpayers a 60 percent ownership stake and expand the government's reach into big business.
The Obama administration said Sunday that it has deemed GM's reorganization plan viable, and will provide the company $30.1 billion in what is called debtor-in-possession financing - money the company can use while it moves through the bankruptcy process.
The company will also receive some support from the governments of Canada and Ontario, which will lend the firm $9.5 billion.
The dollar fell sharply against other major currencies in the past week as global shares surged up on recovery hopes. But contracting gross domestic product, tumbling business investment spending and homebuilding activity in the U.S. suggested lingering economic weakness and reminded investors that the road to recovery is far from near.
The greenback tumbled to a new multi-month low of 1.4247 against the euro during early deals on Monday. This may be compared to Friday's New York session closing value of 1.4148. On the downside, the next likely target for the greenback is seen around the 1.436 level.
The U.S. currency suffered significant weakness versus the euro in May, falling around 7% despite a series of disappointing news from Europe's largest economy, Germany.
The European Central Bank rate decision is due this week. In May, the ECB has lowered its main refinancing rate to a record low of 1 per cent to boost consumption.
The U.S. dollar slumped to its lowest level since October 2008 against the U.K. currency and hit as low as 1.6434 by 4:15 am ET Monday. At last week's close, the pair was quoted at 1.6190. If the dollar slides further, 1.667 is seen as the next likely target level.
The dollar fell nearly 10 per cent versus the pound in May and tumbled around 3.6% in the previous week on the back of rising U.K. equity markets and encouraging data. The pound is the only currency that has strongly appreciated against the dollar in the past week.
On Friday, the pound spiked higher as U.K. house prices rose unexpectedly in May to record the largest increase since October 2007, hinting that the U.K. economy is on the road to recovery. U.K. house prices rose 1.2% in May from the prior month, reversing a 0.3% decline reported in April
The Bank of England will also meet this Thursday to decide on whether to cut, hold, or raise interest rates further.
Against the yen, the dollar slipped to a 5-day low of 94.47 during today's early trading. The next downside target level for the dollar-yen pair is seen around the 93.8 level. The dollar was worth 95.24 against the yen at Friday's New York session close.
Rising equity markets and signs that the global economy's downtrend is easing, such as a rebound in Japanese industrial production put pressure on the dollar.
Against its Swiss counterpart, the dollar declined to a 6-month low of 1.0621 during Monday's early trading and 1.054 is seen as the next likely target level. At Friday's New York session close, the dollar-franc pair was quoted at 1.0677.
From U.S., the Bureau of Economic Analysis is due to release its personal income & outlays report for April. Economists estimate the report, which is due out at 8:30 am ET, to show that personal income fell 0.2% and the personal spending also declined 0.2% in the month.
Thereafter, the results of the manufacturing survey of the Institute for Supply Management, is due at 10:00 am ET. Economists expect the index to show a reading of 42 for May. the Commerce Department's construction spending report is also scheduled to be released at the same time. The report is expected to show a 1.8% decline in spending for April.
The week's biggest economic news comes on Friday in the form of the U.S. government's monthly jobs report for May. Nonfarm payrolls are expected to drop by 550,000 after slipping 539,000 the month before.
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Eurozone Services PMIs Rise In May; Sector Returns To Growth In U.K.
In further signs that the worst of the recession is over, the decline in Eurozone service sector activities eased further in May, reports said Wednesday, citing data released by the Markit Economics.
The purchasing managers' index or PMI for the Eurozone service sector rose to 44.8 in May from a flash reading of 44.7 and 43.8 in April. The PMI thus reached to a seven-month high. However, the headline index is still below the 50-mark that divides expansion and contraction. The expectations index for the service sector rose to a 15-month high of 59.1 from April's 54.4.
The composite index that contains both service and manufacturing PMIs was at 44, an increase from previous month's 41.1 and the flash reading of 43.9.
The PMI for Germany's service sector increased to 45.2 from 43.8 in April and that for France stood at an eight-month high of 48.3, up from 46.5 in April and 47.6 initially estimated. The Italian services PMI climbed to 43.1 from 42 in the previous month. However, in Spain, the activity contracted notably. The PMI fell to 39.1 from 42.3.
Out of the euro area, the CIPS/Markit PMI for the British service sector unexpectedly moved above the 50-mark to record a growth for the first time in a year. The indicator rose to 51.7 in May from 48.7 in April, while forecast was for a reading of 49.5. That was the sixth consecutive gain.
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Pound climbs to 5-day high against yen and franc
Extending its recent rally, the UK's sterling rallied strongly higher against its major rivals on Tuesday morning in Asia. The pound rose to a 5-day high of 158.6 against the Japanese yen and 1.7548 against the Swiss franc by 8:00 pm ET. The pound also ticked up to 1.6102 against the US dollar and 0.8656 against the euro during this time.
Traders mulled reports showing the average asking price for houses in Great Britain came in at -44.1 in May, the Royal Institute of Chartered Surveyors said today, posting an 18-month index high. The score beat analyst expectations for -50.0 following the revised -58.7 in April for the highest reading since November 2007.
At the same time, the British Retail Consortium report showed today that same-store sales in May were down 0.8 percent on year. Overall sales, including those from newly opened stores, were up 0.8 percent on year.
The next upside target levels for the pound are seen at 1.773 against the franc, 161 versus the yen, 1.61 against the buck and 0.865 against the euro. At Monday's North American session, the pound closed deals at 0.8663 against the euro, 1.7525 versus the franc, 1.6053 against the greenback and 158.14 against the yen.
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Crude Stockpiles Drop 4.4 Million Barrels, Gasoline Stocks Also Fall
Crude oil inventories fell sharply in the recent week, according to Energy Information Administration data released Wednesday morning. Gasoline stockpiles also declined.
U.S. commercial crude oil inventories decreased by 4.4 million barrels from the previous week. At 361.6 million barrels, U.S. crude oil inventories remained above the upper boundary of the average range for this time of year.
The report backed the American Petroleum Institute data revealed Tuesday, showing crude supplies dropped 5.96 million barrels last week. Participation in the API survey is voluntary, so the EIA report is more closely watched.
Total motor gasoline inventories decreased by 1.6 million barrels last week, distillate fuel inventories slipped by 300,000 barrels and propane/propylene inventories increased by 1.4 million barrels.
Over the last four weeks, motor gasoline demand has increased by 0.4 percent from the same period last year, distillate fuel demand has declined 8.4 percent from the same period last year and jet fuel demand is 14.3 percent lower.
Crude oil maintained its early gains following the report. Light sweet crude moved to $70.71, up 90 cents for the session. Oil touched as high as $71.79 shortly after the data was announced but quickly cooled off.
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Dollar Choppy Versus Other Majors Wednesday
The dollar firmed up in choppy trading versus other major currencies Wednesday, but most of its gains came prior to the release of the Federal Reserve's Beige Book, which said that economic conditions remained weak or deteriorated further during the period from mid-April through May.
After coming under pressure over the last two days versus the euro and sterling amid increased risk appetite, the dollar steadied as a rally in stocks faded, causing traders to seek safer ground in the world's reserve currency.
The dollar spent most of the afternoon between 1.3900 and 1.4000, staying away from a 5-month low of 1.4338 set a week ago. Versus the sterling, the dollar managed to hold its ground near 1.6350, having slipped more than 5 cents over the previous two sessions. 8 days ago, the buck dropped to a 6-month low of 1.6662, culminating a dismal one-month run to the downside.
Russian Central Bank rattled currency traders today by saying it may cut its U.S. treasury investments in favor of International Monetary Fund bonds.
Also Wednesday, official data showed that the German annual inflation rate reached the lowest level since 1987 on easing energy and food prices. French industrial production dropped faster than expected in April due to widespread contraction in all industrial sub-sectors, especially in the manufacture of petroleum products.
Out of the euro area, British manufacturing output recorded growth for the second straight month in April signaling that the economy is on the road to a gradual recovery.
The dollar crept higher versus the yen, rising back above 98 to challenge a 4-week high of 98.87, set Monday morning. Wednesday saw some key statistical data releases from major Asian economies. Official reports showed that orders for Japanese machinery dropped to the lowest level in more than two decades and in China, consumer prices fell for the fourth straight month.
Back in the US, the Fed's Beige Book, a compilation of anecdotal evidence on economic conditions from each of the twelve Federal Reserve districts, said manufacturing activity declined or remained at a low level across most districts.
However, the Fed said that several districts also reported that the outlook by manufacturers has improved somewhat.
With the value of exports falling by more than the value of imports in the month of April, the Commerce Department released a report Wednesday morning showing that the U.S. trade deficit for the month came in modestly wider than in March.
The report showed that the trade deficit widened to $29.2 billion in April from a revised $28.5 billion in March. Economists had expected the deficit to widen to $29.0 billion from the $27.6 billion originally reported for the previous month.
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Dollar Shows Mixed Trading Against Majors
Thursday during early deals, the U.S. dollar showed mixed performance against its major counterparts. While the recovered its Asian session's loss against the euro and the pound, it pared gains against the yen and the franc. The dollar rose from a 3-day low against the euro and jumped to a 9-day high against the pound.
Traders now look forward to the New York session, in which the Labor Department is due to release its customary weekly jobless claims report for the week ended June 13th at 8:30 am ET.
The results of the Philadelphia Federal Reserve's manufacturing survey are due out at 10 am ET. Economists expect the diffusion index of current activity to show a reading of -17 for June.
At the same time, the Conference Board is scheduled to release a report on the U.S. leading index for May . The consensus estimate calls for a 0.9% increase in the leading indicators index for the month.
The dollar gained against the euro after falling to a 3-day low of 1.3992 at 3:20 am ET Thursday. The euro-dollar pair that closed yesterday's trading at 1.3947 reached 1.3908 by about 4:55 am ET. The near term resistance level for the dollar is seen at 1.383.
Italy's trade deficit decreased to EUR277 million in April from EUR1.02 billion in the previous year, the country's statistical office ISTAT said today. Economists expected a deficit of EUR250 million.
Exports dropped 28.7% year-on-year to EUR23.9 billion, while imports declined 30% to EUR24.2 billion. Month-on-month, on a seasonally adjusted basis, exports fell 2.9% and imports were down 3.9%.
At 5:25 am ET Thursday, the dollar reached a 9-day high of 1.6191 against the pound, moving up from an Asian session low of 1.647. If the dollar strengthens further, it may likely target the 1.581 level.
A report from the Office for National Statistics showed an annual decline of 1.6% in the U.K. retail sales volume in May. Economists had expected only 0.4% fall in sales. From April, retail sales volume unexpectedly decreased 0.6%, as economists were looking for a 0.3% rise.
Meanwhile, the Bank of England said in a preliminary report that the M4 money supply grew 16.6% year-over-year in May, slower than the 17.4% increase in April. Economists had expected an increase of 17.3%.
On a monthly basis, the M4 money supply rose 0.2% in May, marking the same pace as in the previous month. Economists were looking for an increase of 0.7%.
The dollar jumped to 1.0831 against the Swiss franc before losing ground at 1:10 am ET Thursday. Currently, the dollar-franc pair is worth 1.0769, down from yesterday's close of 1.0802. The next target level for the pair is seen at 1.065.
The Swiss National Bank left its three-month libor target range unchanged at 0-0.75% as expected. In other words, the bank kept its key interest rate unchanged at 0.25%.
The central bank said in a statement that it will continue to provide the economy with a generous supply of liquidity and to purchase Swiss franc bonds with the aim of reducing risk premia on long-term bonds issued by private sector borrowers. The SNB also said it will take firm action to prevent an appreciation of the Swiss franc against the euro.
The dollar soared to 96.10 against the yen by about 3:00 am ET Thursday. Thereafter, the dollar dropped and touched 95.64 at 4:55 am ET and this may be compared to Wednesday's close of 95.71.On the downside, 95.53 is seen as the next target level for the U.S. currency.
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Fall In U.K.'s Car Production Slightly Eases In May
Car production in the U.K. fell for the eighth straight month in May, though the decline was the smallest of the year, the Society of Motor Manufacturers And Traders Limited or SMMT said Friday.
Production of cars dropped 43% year-on-year to 67,754 in May after falling 55.3% in April. Production of commercial vehicles slumped 73.5% to 4,692 following 65.2% contraction in the previous month. Hence there was a fall of 47% in total vehicle production in May.
"The scrappage schemes in place across Europe are now beginning to have a positive impact, although the full benefits will take a little longer to flow down to companies at all levels in the supply chain," SMMT Chief ****utive Paul Everitt said.
Commercial vehicle production was severely affected by weak business confidence and economic uncertainty. Everitt said, "Businesses across the economy are still holding back on new expenditure and will need to see better access to finance and stronger domestic demand."
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US Dollar Ticks Up Following May Personal Income Report
The greenback, which slumped to multi-day lows against most majors just before the release of the US Commerce Department report on personal income, started trending higher following the report. As of now, the dollar is trading at 95.42 against the Japanese yen, 1.0847 versus the Swiss franc, 1.6491 against the pound and 1.4083 against the euro.
The report showed that personal income jumped 1.4 percent in May following an upwardly revised 0.7 percent increase in April. Economists had expected income to rise 0.3 percent compared to the 0.5 percent growth originally reported for the previous month.
Additionally, the Commerce Department also said that personal spending rose 0.3 percent in May after coming in unchanged in the previous month. The moderate increase in spending came in line with economist estimates.
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Dollar And Yen Plunge On Improving Risk Appetite
Tuesday in Asia, the U.S. dollar and the Japanese yen plummeted against their key counterparts as hopes of an economic recovery increased risk appetite to buy higher-yielding assets.
The dollar and the yen are viewed as safe-haven currencies and tend to attract buying when worries about the global economy and financial markets flare up, but can come under pressure when such concerns recede.
Asian stock markets are broadly higher today, taking their cue from gains on Wall Street with energy stocks buoyed by a continued rise in crude oil prices.
Japan's Nikkei 225 was up 1.9%, Australia's S&P/ASX 200 was 1.5% higher, Korea's Kospi Composite Index was up 0.8%, Hong Kong's Hang Seng was up 1.4%, China's Shanghai Composite was 0.1% higher and Taiwan shares were up 0.9%.
Japan's Nikkei average rose 1.9 percent today, and briefly it hit 10,000 as surging crude prices boosted trading houses such as Mitsubishi Corp., which deal in oil, amid growing optimism that economic recession may be easing.
The 225-issue Nikkei Stock Average gained 184.57 points, or 1.89 percent, from Monday to 9,968.04 in the morning session after briefly touching 10,000.30. The benchmark index last topped the 10,000 line on June 15, logging an intraday high of 10,126.55.
The broader Topix index of all First Section issues on the Tokyo Stock Exchange was up 14.32 points, or 1.56 percent, to 929.64.
Stock market gains are fueling risk appetite in the currency markets, sending the euro, aussie and kiwi higher.
Sentiment in Japan was helped by news that household spending in May rose 0.3% on year, up for the first time in 15 months, and beating expectations for a 1.5% decline.
But that was tempered by the release of the May jobless rate, which rose to 5.2%, the highest since September 2003, from 5.0% in April. Analysts had expected an increase of 5.1% for May.
The job-to-applicant ratio came in at a record low of 0.44, compared to forecasts for 0.45 after the 0.46 level in April.
But the number of employed persons rose from 63.22 million in April to 63.42 million in May. The job participation rate was 60.5 percent, up from 60.4 percent a month earlier.
The Organization for Economic Cooperation and Development last week forecast Japan's jobless rate will rise to an unprecedented 5.8 percent in 2010.
In Asian trading on Tuesday, the yen fell to a 2-week low of 159.97 against the pound. This may be compared to yesterday's close of 159.15. If the yen weakens further, it may likely target the 162.6 level.
The yen has declined 4% against the pound after it reached a 3-week high of 154.13 on June 23.
The yen tumbled to a 15-day low of 135.97 against the euro during Asian deals on Tuesday. The next downside target level for the Japanese currency is seen at 138. At yesterday's close, the euro-yen pair was quoted at 135.32.
The euro gained 1% against the yen yesterday after a report showed that the Euro-zone economic sentiment rose more than expected in June.
The economic sentiment indicator rose to 73.3 from an upwardly revised reading of 70.2 recorded in May. Meanwhile, economists had expected the index to rise to 71 from May's initially reported reading of 69.3.
Against the Swiss franc, the yen slipped to a 6-day low of 89.14 in Asian deals on Tuesday. On the downside, 89.8 is seen as the next target level for the yen. The franc-yen pair was worth 88.80 at Monday's New York session close.
After hitting a 1-month high of 86.89 against the franc on June 24, the yen has been declining and it has lost more than 2% thus far.
The dollar also weakened today on optimism the global slump is waning, reducing the currency's appeal as a refuge.
During Asian deals on Tuesday, the dollar plunged to 1.6663 against the pound. This set the lowest level for the dollar since June 03. If the dollar slides further, it may likely target a new multi-month low of 1.70. The pound-dollar pair closed yesterday's trading at 1.6567.
The pound rose as U.K. consumers became much more upbeat about the economy's prospects over the next 12 months in June, boosting the overall measure of confidence for the fourth time in five months.
Consumers seem to believe that the measures taken by the government and the Bank of England to support the economy are likely to work, and indicating that they in turn won't cut back on spending as sharply as many economists had expected.
Polling firm GfK NOP said today that the headline measure of consumer confidence rose to -25 in June from -27 in the previous month. The index was in line with economists' expectations. At the same time, the index came in better than the minus 34 registered in June last year.
The dollar plummeted to a 7-month low of 1.6666 against the pound on June 03. Although the dollar gained thereafter, it pulled back again after reaching a 12-day high of 1.5805 on June 08.
However, the pound-dollar pair largely bounced between 1.6212 and 1.6623 for the past two weeks, but the pair moved off the range today.
The dollar slumped to a 4-day low of 1.0802 against the Swiss franc and a 6-day low of 1.4133 against the euro in Asian deals on Tuesday. If the dollar drops further, it may likely target 1.065 against the franc and 1.418 against the euro. The euro-dollar pair closed trading at 1.4089 and the dollar-franc pair at 1.0823 on Monday.
Extending yesterday's 1% gain, the dollar surged up against the yen in today's early Asian deals and reached a 5-day high of 96.33 at 8:05 pm ET. But the dollar fell thereafter and the pair is currently trading at 95.69, down from yesterday's New York session close of 96.06. The near term support level for the U.S. currency is seen at 95.1.
Traders are now likely to focus on the European session, in which the Swiss May UBS consumption indicator, French May PPI, German June unemployment rate, Euro-zone M3 money supply for May and CPI for June, Italian CPI for June and PPI for May, U.K. final first quarter GDP estimate and current account reports are expected.
From the U.S., the S&PCase-Shiller home price index for April and the consumer confidence report for June are due in the North American session.
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Greenback Declines Against Majors
The US dollar that edged slightly higher against its major rivals immediately after the ADP employment report lost ground shortly. As of 8:30 am ET, the greenback drifted lower to 96.67 against the Japanese yen, 1.0795 against the Swiss franc, 1.6494 against the pound and 1.4123 against the euro.
The ADP report showed that non-farm private employment fell by 473,000 jobs in June following a revised decrease of 485,000 jobs in May. Economists had expected a decrease of 394,000 jobs compared to the loss of 532,000 jobs originally reported for the previous month.
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Greenback Falls Versus Euro, Sterling Thursday Morning
The dollar pulled back versus the euro and sterling but managed to stabilize against the resurgent yen Thursday morning in New York, as traders looked ahead to weekly jobless claims figures.
Yesterday, The Group of Eight largest industrialized nations meeting in L'Aquila released a statement recognizing serious downside risks to the global economy.
Still, stock futures on Wall Street crept ahead Thursday morning on Wall Street, fueling renewed risk appetite. Alcoa kicked off earnings season with a better than expected result.
The dollar gave back some of its recent gains versus the euro and sterling. Versus the euro, the dollar dropped to 1.3980, falling more than a penny from its 3-week high of 1.3832.
The dollar plunged versus the sterling, dropping to 1.6260 from a monthly high of 1.5982.
Thursday, the Bank of England retained its key interest rate and decided to continue with its asset purchase scheme totaling GBP 125 billion by utilizing central bank reserves.
At the end of the two-day rate setting meeting, the Monetary Policy Committee decided to hold the Bank Rate at 0.5% as expected. The rate now stands at the lowest since the central bank was established in 1694.
The dollar steadied versus the yen,, holding near 93 after plummeting to a 5-month low of 91.79.
Despite nagging rumors that G8 leaders would discuss an alternative to the dollar as the world's de facto reserve currency, there was no mention of a new international currency in the statement released following the first day of meetings in Italy.
A Labor Department report on the number of first time claimants for unemployment benefits is likely to be in the radar, given the linkage jobs and wage growth has got with consumer spending. Economists expect the report to reveal a decline in claims in the recent reporting week. Additionally, the results of the Treasury auction of $11 billion worth of 30-year bonds may also be closely watched.
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Dollar Strengthens Against European Majors
Friday morning in Asia, the U.S. dollar advanced against the currencies of Europe, U.K. and Switzerland. On the other hand, the dollar pared its recent gains against the Japanese yen.
Leaders of the world's biggest developed and emerging nations avoided a debate over the dollar's role in the global economy as they agreed not to devalue their currencies to promote their exports.
With officials from Brazil, India, China and Russia pushing consideration of alternative reserve currencies, their joint statement's language on foreign exchange echoed an agreement at an April summit of the Group of 20.
The leaders agreed to "refrain from competitive devaluations of our currencies," according to the statement released after their meeting yesterday at the G-8 summit in L'Aquila, Italy. They also agreed to "promote a stable and well-functioning international monetary system."
The global financial crisis and the surge in U.S. borrowing have prompted Russian President Dmitry Medvedev to advocate diversification away from the dollar. Russia and its counterparts have yet to come up with a viable alternative.
The dollar that closed yesterday's trading at 1.4025 against the euro rose to 1.3969 during early Asian deals on Friday. The near term resistance level for the U.S. currency is seen at 1.389.
A report from the U.S. Labor Department showed yesterday that first-time claims for unemployment benefits decreased substantially in the week ended July 4th.
The report showed that jobless claims fell to 565,000 from the previous week's revised figure of 617,000. Economists had been expecting a more modest decrease to 603,000 from the 614,000 originally reported for the previous week.
In early Asian trading on Friday, the dollar climbed to 1.6273 against the pound. This may be compared to yesterday's close of 1.6339. On the upside, 1.61 is seen as the next target level for the dollar.
Against the Swiss franc, the dollar gained in early Asian deals on Friday. At 10:45 pm ET, the dollar-franc pair reached 1.0830, up from yesterday's 1.0783. If the pair advances further, it may likely target the 1.092 level.
The dollar strengthened to 93.20 against the yen at 7:50 pm ET Thursday. Thereafter, the dollar-yen pair slipped and it is presently trading near yesterday's close of 92.99. The next downside target level for the pair is seen at 91.8.
An index measuring the prices of domestic corporate goods fell 6.6 percent on year in June, the Bank of Japan said today, marking the fastest pace of decline on record.
Analysts had been expecting a fall of 6.4 percent on year following the revised 5.5 percent decline in May. On a monthly basis, the prices for corporate goods eased 0.3 percent versus expectations for a 0.1 percent decline. The May reading was revised from -0.4 percent to -0.5 percent.
The industrial production reports from France and Italy as well as the French current account-all for the month of May are scheduled for release in the European session today.
From the U.S., the trade balance for May, import and export price indexes for June and the Reuters/University of Michigan's preliminary consumer confidence report for July are expected in the New York session.
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East Asian Economies In Transition Phase From Recession To Recovery: ADB
Thursday, in its July issue of the Asia Economic Monitor, the Asia Development Bank noted that the East Asian Economies had already entered the transistion from recession to recovery, although the economic growth was continuing to slow this year.
"Emerging East Asia could see a V-shaped recovery, with growth dipping sharply in 2009 before regaining last year's pace in 2010," Jong-Wha Lee, ADB Chief Economist and Head of the Office of Regional Economic Integration said.
However, the report cautioned saying that given the tentative nature of the expected recovery, it was critical for authorities to continue to follow measures which would support domestic demand and growth. "Monetary and fiscal policies in the region need to remain accommodative until the recovery gains substantial traction", the ADB said.
"Emerging East Asia should reinforce cooperation in enhancing financial stability by accelerating regional initiatives, and actively participate in designing the new global financial architecture", it added.
Moreover, the ADB pointed out that deep recessions in the U.S,Europe and Japan would continue to hurt emerging Easing Asian economies, particularly the smaller one that were highly reliant on exports. However, larger economies like China, that had implemented major fiscal packages were begining to see some results from the stimulus packages.
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Dollar Nearing December 2008 Lows Versus Euro
The dollar came under further pressure versus the euro and continued its trek toward parity against the surging loonie Monday morning in New York.
Rising global stocks and speculation that the economy is on the mend have fueled increased appetite for riskier higher yielding currencies.
Traders were looking ahead to a fairly busy week on the economic front, kicked off by the Commerce Department's new home sales report for June.
The consensus estimate for the report coming at 10 AM ET this morning calls for an increase in new homes sales to 352,000.
New home sales declined 0.6% in May from the previous month to a seasonally adjusted annual rate of 342,000.
The dollar remained on the defensive versus the euro, dropping to an 8-week low of 1.4296, just shy of its lows from last December. A move to 1.4340 would take the dollar to its lowest level since the last week of 2008.
There was no relief for the dollar versus the scorching-hot loonie. Amid growing evidence that the Canadian economy is in much better shape than its neighbor to the south, the dollar dropped to C$1.0780, its lowest level since September 2008.
The dollar extended its run of choppy trading versus the sterling, easing to 1.6500 after seeing some modest strength late last week.
Versus the yen, the dollar firmed up slightly to 95.20, staying near a monthly high of 95.28.
In economic news from around the globe, German consumer confidence for August improved strongly, suggesting a recovery in the economy that is hit hard by recession.
According to the latest consumer climate survey from the market research firm GfK, the forward-looking consumer sentiment index rose to 3.5 points for August.
Monday, the quarterly report from the Bank of England said the continued asset purchases in the second quarter were accompanied by signs of improvement in the corporate credit markets.
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IMF Advises Indonesia To Continue Stimulus Measures In 2010
The International Monetary Fund welcomed Indonesia's fiscal stimulus plan for 2009, underscoring timely and efficient implementation of the spending program. The Washington-based agency urged Indonesia to maintain some of the stimulus measures next year.
The IMF Board of Directors noted that private consumption supported by the fiscal stimulus package helped to maintain positive economic growth. However, another round of global risk aversion could adversely affect nation's external liquidity, demand and growth prospects. To withstand these risks, the authorities should strive to achieve the appropriate policy mix and promptly adjust it as needed to preserve macroeconomic and financial stability.
The board assessed that the current level of the real effective exchange rate is broadly in line with fundamentals and that reserves are at a comfortable level. Some others believed that the current level of reserves and the various contingency arrangements should provide an adequate cushion.
Regarding inflation, the fund said, "Strong commitment to the medium-term inflation targets, as well as publication of inflation forecasts, would help guide inflation expectations and enhance policy credibility."
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Trust In Business Recovering In World Markets: Survey
The public's trust in business has stabilized and is recovering significantly in some of the world's largest markets, results of a survey conducted by Edelman, a leading independent public relations firm, showed Thursday.
Edelman's previous survey, conducted in January, showed a devastating loss in trust in the private sector.
The mid-year survey was conducted among 1,675 informed public in six countries - the U.S., the U.K., France, Germany, India, and China.
The survey found that India and China are the most positive about business. At 75%, India recorded the highest level of trust in business of any of the six countries surveyed. China followed with 60% saying they trust business to do what is right.
"The private sector is perceived as enabling an economic growth that has led to healthier living standards. The survey numbers reflect a high degree of national pride in the accomplishments of business," said Alan VanderMolen, president, Asia Pacific, Edelman.
In the U.S., 48% of informed public trust business to do what is right, up from a low of 36% in January. The figure for France rose to 41% from 30%.
"Trust in business is on the way back, but we're still in the middle of the game," said Richard Edelman, president and CEO, Edelman.
The public's trust in government rose the most in India, an increase of 13 points to 55% followed by the U.S., where the trust barometer rose 12 points to 42%.
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German Retail Sales Fall Unexpectedly In June
German retail sales dropped unexpectedly in June despite rising consumer confidence and low price level as recession continued to put pressure on consumer spending.
According to a provisional report from the Federal Statistical Office, retail sales for June recorded a surprise monthly decrease of 1.8% in real terms, following a revised 1.3% drop in May. Economists were looking for a 0.3% rise.
Year-on-year, sales slipped 1.6% in June, smaller than a revised 3.7% fall seen in May. The annual decline was also unexpected as economists were looking for an increase of 0.9%.
For the January to June period, retail turnover dropped 2.1% in real terms compared to the corresponding period of the previous year. Sales were down nominally by 2.3%.
In nominal terms, retail sales dipped 2% year-on-year and 1.6% from the prior month in June.
Simon Junker, Commerzbank analyst said in a note that German retail sales proved to be stable despite severe recession, probably because of the still stable labor market and the low price level. The crisis has reached retail too, supporting the judgment that the largest Eurozone economy shrunk again in the second quarter, albeit only moderately, he said.
According to the analyst, the German economy would possibly pick up in the months ahead, though retail may not benefit very much in the coming months. At most, the favorable price trend could strengthen purchasing power and support sales. However, rising unemployment would dent retail sales again.
German unemployment decreased in July, which was the first decline since October 2008. Meanwhile, the jobless rate stood at 8.3%, unchanged from June.
Consumer confidence and business climate in the economy showed improvements in recent months as a result of Chancellor Angela Merkel's spending plan. Merkel is seeking a second-term in office in September elections.
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Fitch Maintains Stable Outlook For Malaysian Banks' Credit Ratings
Thursday, Fitch Ratings maintained the stable outlook on Malaysia's local banks' credit ratings, despite very weak macro economic indicators.
The firm said the probability of capital impairment for Malaysian banks still appeared fairly low, despite the extremely stressed macro economic conditions and the reasonably-stressed assumptions simulated by the agency. Fitch said this in the context of its report titled "Stress Test on Malaysian Banks", where it attempts to simulate a fairly-stressed scenario for Malaysian banks.
The firm also noted that although banks' earnings were likely to be lower in 2009 and 2010 compared with 2008, they appeared adequate to fully absorb the credit costs associated with asset quality deterioration. This means their loss absorption capacity would likely remain adequate and financial strength largely intact, Fitch said.
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Pace Of Deterioration In U.K. Job Market Slowing: CIPD/KPMG Survey
The pace of deterioration in the U.K. job market is slowing as private sector demand for staff began to stabilize following a surge of redundancies earlier in the year, results of the latest quarterly CIPD/KPMG labor market outlook survey revealed Monday.
The survey of more than 900 employers in all sectors of the economy found that not only are far fewer employers expecting to make staff redundant but the scale of planned redundancies has also reduced. However, signs of improved employer optimism in the private sector are offset by mounting pessimism in the public sector.
"When it comes to the immediate jobs outlook, the best that can be said is that things are getting worse more slowly," John Philpott, chief economist at the CIPD said. But, he warned that "It is far too soon to rule out another avalanche of private sector redundancies later in the year." According to the survey, employment will keep falling and unemployment is still on course to top 3 million in 2010. Due to a fall in expected redundancies, the private sector unemployment would be less compared to the public sector.
The balance of private firms cutting over those recruiting fell to minus 2 from minus 30 recorded in the spring. By contrast, in the public sector the negative balance has increased from minus 3 to minus 28.
Moreover, the survey found that the pay outlook has worsened, with only 15% of respondents planning to conduct a pay review this quarter, compared to 32% in the previous quarter.
Andrew Smith, chief economist at KPMG said, "This conservative approach indicates that business remains unconvinced that current economic green shoots will lead to sustainable healthy growth in the near term."
Average pay increase expectations have dropped below the rate of inflation to 1.7%. Smith said this will result in a reduction in real earnings and could stifle any consumer led recovery.
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Yen Extends Uptrend As Asian Stocks Drop
Wednesday, the yen extended its yesterday's uptrend against other major currencies as Asian stocks tumbled today and prompted investors to further liquidate yen short positions ahead of a policy statement from the U.S. Federal Reserve later in the day.
Asian shares plunged today after losses on Wall Street and as investors locked in profits as they waited to hear what the U.S. Federal Reserve would say about prospects for recovery in the world's largest economy.
Japan's Nikkei 225 was down 1.17%, South Korea's Kospi Composite fell 0.87%, Hong Kong's Hang Seng was 1.93% lower while China's Shanghai Composite slipped 2.93% and Taiwan's main index dropped 0.15%.
The Fed will conclude its two-day policy meeting and release a statement around 2:15 pm ET today, with investors looking to its assessment of the economy and whether it unwinds some of the unconventional easing measures currently in place.
There is mounting speculation that Fed might grow more optimistic about a recovery after a better-than-expected jobs report for July.
The U.S. Labor Department report showed that non-farm payroll employment fell by 247,000 jobs in July following a revised decrease of 443,000 jobs in June. Economists had been expecting employment to fall by 325,000 jobs compared to the drop of 467,000 jobs originally reported for the previous month. The Labor Department also said that the unemployment rate unexpectedly edged down to 9.4% in July from 9.5%, recording a decrease for the first time since April 2008.
The Fed has kept its target rate for overnight loans between banks in a range from zero to 0.25 percent since December. The Federal Open Market Committee will keep rates unchanged today, analysts expect. The central bank has bought $252.761 billion of U.S. Treasuries since it announced a six-month plan in March to purchase $300 million of Treasuries to help keep borrowing low.
Japan's corporate goods price index fell at a record pace in July, adding to concerns that deflation in the world's second largest economy is accelerating.
The Bank of Japan's CGPI data, which tracks prices of domestically produced and used goods traded among companies, plunged 8.5% in July from a year earlier, breaking the record 6.7% drop set in the previous month. Moreover, this was the seventh consecutive month of decline.
Today's results will likely heighten fears of persistent price falls in Japan, as overall economic activity has yet to show signs of a full-fledged recovery.
Still, BOJ Governor Masaaki Shirakawa said at a regular press conference on Tuesday that the BOJ doesn't expect Japan to fall into a deflationary spiral now, though "it may take time for falls in prices to end."
On a monthly basis, the domestic CGPI rose 0.4% in July, following the 0.3 percent decline in the previous month.
Meanwhile, a final report from the Ministry of Economy, Trade and Industry showed that Japan's industrial production growth in June came in at 2.3% on a monthly basis, revised down from 2.4% estimated initially. From the previous year, production plunged 23.5%.
The yen that closed yesterday's trading at 96.01 against the dollar strengthened to a 5-day high of 95.35 during Asian deals on Wednesday. The next upside target level for the yen is seen at 94.7.
The yen plunged to near an 8-week low of 97.80 against the dollar on August 07 as the dollar gained 2% on that day following better-than-expected U.S. jobs data.
But the yen is showing strength this week on encouraging economic reports from Japan. Reports showed this week that Japan's current account surplus and the machinery orders rose more than expected in June. Thus far, the yen has advanced 2.5% against the dollar.
In Asian trading on Wednesday, the yen rose to a 9-day high of 134.91 against the euro. This may be compared to yesterday's closing value of 135.84. On the upside, 133 level is seen as the next target for the Japanese currency.
After hitting a 2-month low of 138.73 against the euro on Friday, the yen has appreciated 3% thus far.</p>
<p>The yen jumped to a 12-day high of 157.29 against the pound in Asian deals on Wednesday. If the yen edges up further, it may likely target the 154.2 level. The pound-yen pair was worth 158.21 at yesterday's close.
Thus far this week, the yen has depreciated 3% against the pound.
During Asian deals on Wednesday, the yen soared to a 12-day high of 88.16 against the Swiss franc. The next target level for the Japanese currency is seen at 87.1. At yesterday's close, the franc-yen pair was quoted at 88.78.
The yen that slumped to near an 8-week low of 90.74 against the franc on Friday has gained 3% since then.
In Asian deals on Wednesday , the yen jumped to a 13-day high of 78.47 against the Aussie and an 8-day high of 63.33 against the NZ dollar. The next upside target level for the yen is seen at 77.0 against the aussie and 63.0 against the kiwi. The aussie-yen pair closed trading at 79.63 and the kiwi-yen pair at 64.09 on Tuesday.
Consumer confidence in Australia rose to a near two-year high in August, as reported today by Westpac Bank and the Melbourne Institute. The group said its index of consumer sentiment was up 2.7 percent compared to July, reaching its highest level since October 2007. The index has increased 27.8 percent since May, making it the sharpest three-month gain since the survey's inception in 1975.
Against the Canadian dollar, the yen surged up to a 2-week high of 86.53 in Asian trading on Wednesday. On the upside, 86.3 is seen as the next target level for the Japanese currency. At yesterday's close, the loonie-yen pair was quoted at 87.15.
The loonie declined as oil steadied below $70 a barrel today after four consecutive days of losses as the market waited for a second set of U.S. inventory data and kept an eye on the outcome of the U.S. Federal Reserve's two-day meeting.
U.S. light crude for September delivery rose 9 cents to $69.54 a barrel in Asian deals, having lost $1.15 on Tuesday on Wall Street losses and after the Energy Information Administration (EIA) revised lower its global oil demand forecast. London Brent crude fell 6 cents to $72.40.
Looking ahead, the French July CPI and June current account, Italian final July CPI, Euro-zone June industrial production, U.K. labor market reports as well as the Bank of England's quarterly inflation report are expected to influence trading in the upcoming session.
From the U.S., the trade balance report for June is due at 8:30 am ET.
At the same time, the Canadian June trade balance and new housing price index reports are scheduled for release.
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Dollar Declines Against European Majors
The US dollar that showed signs of recovery against most of its major rivals immediately following the release of the S&P/Case-Shiller home price index for June lost ground shortly. As of 9:10 am ET, the greenback drifted lower to 1.0571 against the Swiss franc, 1.6447 versus the pound and 1.4362 against the euro.
The report showed that the S&P/Case-Shiller 20-City Composite Home Price Index fell at an annual rate of 15.4 percent in June compared to a revised 17 percent drop in May. Economists had expected prices to fall 16.4 percent compared to the same month a year ago.
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UK House Prices Rise For Fourth Month In August - Nationwide
House prices in the UK rose for the fourth consecutive month in August, increasing by 1.6% month-on-month on a seasonally adjusted basis, the Nationwide building society said Thursday. Economists had forecast house prices to grow only 0.5% after a revised increase of 1.4% in July.
Compared to the previous year, house prices fell 2.7% in August, much slower than the 6.2% decline seen in July. The average price of a typical UK property stood at GBP 160,224, up from GBP 158,871 in July.
Over the first eight months of 2009, the seasonally adjusted index of house prices has risen by 3.2%, though relative to the October 2007 peak it is down by 14.4%, the Nationwide said.
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Doing Business In China Getting Harder, European Business Lobby Says
European businesses feel doing business in China is getting harder, a report from the European Union Chamber of Commerce in China showed Wednesday.
In its business position paper 2009/2010, the business lobby said European businesses have observed a slowdown after China made strict regulations over the past twelve months, with some sectors reporting that the situation has actually gotten worse as industrial-policy interventions and foreign investment restrictions have increased.
The European Chamber urged China to open up its markets and to make fundamental reforms to maintain the attractiveness of China as an investment destination for European businesses. Such moves will also help China to build a sustainable economic recovery.
"European businesses believe that the current economic crisis provides a prime opportunity for China to restructure the economy and build a transparent and fair business environment for all companies, both domestic and foreign."
The European Chamber believes that China can play a proactive role in easing trade tensions by arresting the regression in the reform process observed in many industries and adopting measures to build a level playing field for all businesses in China.
"Such moves would also serve to boost investment and domestic consumption, and in turn enable the Chinese economy to achieve its latent potential."
"Over the past year, the European Chamber has noted a gradual slowdown - and in some cases a partial reversal - in the economic opening up process," said Joerg Wuttke President of the European Chamber.
However, China's experience in the last three decades has clearly proved that it is precisely in periods of crisis that increased opening and reform has bred the greatest success.
"We are convinced that this is an ideal moment for China to adopt a new and bolder cycle of reforms, a move that would ensure that China maximizes its growth potential over the next five to ten years," Wuttke said.
The European Chamber will be presenting its paper to government and regulatory agencies in China, to the European Commission and EU member state governments, and to a wide range of business organizations and companies in China and Europe.
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Crude Oil Slips Slightly, Remains Near $68
Crude oil prices saw little change for a second straight session on Thursday, remaining near the $68 per barrel mark. Traders looked ahead to the jobs report on Friday
Light sweet crude for October fell to $67.96, down nine cents on the session. Prices touched as high as $69.40 after earlier hitting as low as $67.66.
The Labor Department's non-farm payroll report is expected at 8:30 a.m. ET tomorrow. Jobs are expected to drop by 225,000 jobs in August, compared to a drop of 247,000 in July. The unemployment rate is expected to inch up to 9.5%, compared to 9.4% a month earlier.
In economic news, the Labor Department reported jobless claims edged down to 570,000 from the previous week's revised figure of 574,000. Economists had been expecting jobless claims to slip to 564,000 from the 570,000 originally reported for the previous week. The Labor Department's monthly employment situation report is due tomorrow.
Later, the Institute for Supply Management said its index of activity in the service sector rose to 48.4 in August from 46.4 in July, with a reading below 50 indicating a contraction in the sector. Economists had been expecting a slightly lower reading of 48.0.
On Wednesday, the Energy Department revealed U.S. commercial crude oil inventories decreased by 400,000 barrels in the week ended August 28 to reach 43.4 million barrels. Experts were looking for a drop of about 1.9 million barrels. Total motor gasoline inventories decreased by 3.0 million barrels last week.
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US Dollar And Japanese Yen Falls As Stocks Rise
During early deals on Monday, the US dollar and the Japanese yen edged down against their major counterparts as a rise in Asian and European stock prices reduced demand for currencies perceived as safe havens.
The dollar and the yen are viewed as safe-haven currencies and both currencies gain, when investors turn risk averse and fall when risk appetite improves.
The dollar slipped to a 6-day low against the European currency, 13-day low versus the British pound, 4-day low against the Swiss franc, while edged higher to a 6-day high against the Japanese yen.
Against the European currency, the US dollar edged down during early deals on Monday. At 3:05 am ET, the dollar touched a 6-day low of 1.4363 against the euro, compared to 1.4312 hit late New York Friday. The next downside target level for the US currency is seen around 1.445.
The Sentix investor confidence indicator for the Eurozone rose to minus 14.61 in September from minus 17 in August. Economists had forecast a reading of minus 13.7. Among the sub-indicators, the current situation index moved to minus 32.75 from minus 39, while the expectations index fell to 5.50 in September from 8 in August.
The US currency that closed Friday's North American session at 1.6399 against the British pound slipped to a 13-day low of 1.6445 at 3:35 am ET Monday. The pound-dollar pair is currently trading at 1.6419 with 1.660 seen as the next target level.
Against the Swiss franc, the greenback traded down during Monday's early deals. At 3:05 am ET, the dollar-franc pair declined to a 4-day low of 1.0558, compared to Friday's closing value of 1.0603. If the pair falls further, 1.054 is seen as the next target level for the pair.
The US dollar gained ground after hitting a low of 92.95 against the Japanese yen during today's early Asian deals. At 4:15 am ET, the dollar-yen pair climbed to a 6-day high of 93.31. On the upside, 93.6 is seen as the next target level for the pair. The pair closed Friday's New York deals at 93.01.
The Japanese yen showed weakness against its major counterparts during today's early deals.
The Japanese currency edged down to a 10-day low of 153.29 against the British pound and a 6-day low of 133.89 versus the European currency during today's early deals. If the Japanese yen falls further, 154.1 against the pound and 134.5 versus the euro are seen as the next target levels. The yen closed Friday's deals at 152.53 against the pound and 133.11 against the euro.
Against the Swiss franc, the Japanese unit showed weakness during today's deals. At 4:15 am ET, the yen slipped to a 6-day low of 88.32 against the franc, compared to Friday's closing value of 87.76. The next downside target level for the Japanese yen is seen around 88.6.
The U.S. financial markets are closed today in observance of the Labor Day holiday.
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Trichet: Global Economy Probably Out Of Freefall
The global economy is probably out of freefall and stabilizing faster than previously expected, European Central Bank President Jean-Claude Trichet said Monday.
"We are probably in large part of the global economy out of the period of free-fall," he said at the end of a discussion held at the Bank for International Settlements, Basel, Switzerland.
Trichet, who chairs the oversight body of the Basel Committee on Banking Supervision, said the outlook for the global economy had brightened and the recovery would be faster than anticipated.
"We have to remain prudent and cautious and it's not excluded we will have a bumpy road. Uncertainties are big," Trichet said. He stated that the current situation still requires "caution, prudence and alertness."
Further, Trichet pointed out that protectionism and imbalances in the world economy are the two main risks to a recovery.
"Authorities and the private sector will not be forgiven if we again have to cope with a situation as dramatic as the one we have had to cope with in September last year," Trichet warned.
He also noted that reforms are necessary to strengthen the financial system to avoid further risks.
Late on Sunday, leading central bank governors and banking regulators agreed on a new set of measures to strengthen supervision of the global banking system. With the new rules in force, banks would be required to earmark major part of their profits as reserve to use in tough times.
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European Economics Preview: BoE Expected To Retain Key Rate
Thursday, the Bank of England is set to announce its interest rate decision. The central bank is widely expected to leave the interest rate untouched at a record low of 0.5% and to continue its GBP 175 billion asset purchase programme.
At 2.45am ET, the French statistical office INSEE is scheduled to issue industrial production data. Month-on-month, industrial production is forecast to rise 0.4% in July and manufacturing output growth is seen at 0.5%.
Thereafter, the Hungarian CPI and Turkish GDP reports are due. Economists forecast Hungarian annual inflation to rise to 5.8% in August from 5.1% in July. The Turkish economy is forecast to shrink 8% annually in the second quarter.
Half an hour later, consumer prices details are due from Denmark and Sweden. Sweden consumer prices are forecast to drop 1% annually in August compared to a 0.9% fall in July. Meanwhile, Danish annual inflation is expected to rise to 1.1% in August from 1% in July.
At 4.00am ET, the European Central Bank is set to issue monthly bulletin. In the meantime, Norwegian CPI and PPI reports are also due.
At 5.00am ET, a final report for the second quarter GDP is due from the Italian statistical office.
News are provided by InstaForex.
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Greenback Pares Recent Losses Monday Morning
The dollar was stable Monday morning in New York following last week's brutal losses, as traders geared up for a busy week on the economic front.
Increased risk aversion has driven the dollar to its lowest level of the year versus a basket of major currencies, but renewed concerns about the sustainability of the economic recovery could give the buck a boost in the coming days.
Monday's economic calendar is fairly light, with President Obama giving a speech on the economy and financial regulation in New York.
However, later in the week, traders will be flooded with a spate of economic data, which could help them gain more clarity on the economy's course.
The Commerce Department's retail sales report for August, the results of the New York Federal Reserve's and Philadelphia Federal Reserve's manufacturing surveys for September and the Federal Reserve's industrial production report for August may be closely watched.
The dollar rose sharply versus the sterling, jumping almost 2 cents to 1.6550 from a monthly low set late last week.
The buck also firmed up versus the euro, holding near 1.4550. Last week, the dollar hit a 2009 low of 1.4634 as stocks continued to improve.
The European Commission kept its economic outlook unchanged from May's spring forecast. Gross domestic product or GDP is expected to fall 4% this year in both the Eurozone and in the EU.
The dollar pared some of its recent losses versus the yen, improving to 90.90 from a February low of 90.18. With the advance, the dollar stayed away from a 13-year low of 87.08 set back in January.
Meanwhile, the buck hit a weekly high of C$1.0900 versus the loonie. Early in August, the dollar hit a yearly low of C$1.0630, but has since managed to stabilize.
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US Dollar Stable Ahead Of August Housing Starts, Weekly Jobless Claims Reports
The U.S. Census Bureau will release a report on housing starts for August at 8:30 am ET. Economists estimate housing starts of 580,000 for the month.
At the same time, the Labor Department is due to release its customary jobless claims report for the week ended September 12th. Economists expect a modest increase in claims to 555,000.
The US dollar stabilized against most of its major opponents ahead of the reports. As of now, the greenback is quoted at 91.4 against the yen, 1.653 per pound, 1.032 versus the Swiss franc and 1.472 against the euro.
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During early deals on Monday, the US dollar and the Japanese yen edged down against their major counterparts as a rise in Asian and European stock prices reduced demand for currencies perceived as safe havens.
The dollar and the yen are viewed as safe-haven currencies and both currencies gain, when investors turn risk averse and fall when risk appetite improves.
The dollar slipped to a 6-day low against the European currency, 13-day low versus the British pound, 4-day low against the Swiss franc, while edged higher to a 6-day high against the Japanese yen.
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US Dollar Soars To New Multi-day Highs Against Majors
During early European deals on Monday, the US dollar rose to new multi-day highs against its major counterparts as a fall in most Asian and European stocks boosted demand for the safe haven greenback.
The dollar and the yen are viewed as safe-haven currencies and both currencies gain, when investors turn risk averse and fall when risk appetite improves.
Most of the stock markets were modestly lower today as investors look to this week's Federal Reserve meeting for more clues about the strength of the U.S. Recovery.
Early in Europe, Britain's FTSE 100 lost 0.4 percent, Germany's DAX fell 0.8 percent and France's CAC-40 dropped 0.3 percent.
In Hong Kong, the Hang Seng fell 150.60 points, or 0.7 percent, at 21,472.85 in back-and-forth trade, while South Korea's Kospi lost 0.3 percent to 1,695.50. China's Shanghai benchmark was up 0.2 percent at 2,967.01 and Australia's benchmark shed 0.3 percent.
Japanese financial markets are closed today for public holidays. Financial markets in India, Indonesia, Malaysia, Philippines and Singapore were also closed Monday for holidays.
World markets posted more gains last week as U.S. Federal Reserve Chairman Ben Bernanke said recession in the world's largest economy was "likely over."
This week, investors will watch closely what the Fed has to say about the economy and the scale of the recovery after a two-day meeting that wraps up Wednesday.
At its August meeting, the FOMC decided along the expected lines and maintained the fed funds futures rate unchanged. In its post-meeting policy statement, the Fed noted that economic activity is leveling out, an improvement from its previous opinion that the pace of contraction is slowing. There weren't any major changes to the references the committee made towards other measures.
Regarding its Treasury securities purchasing program, the central bank said the committee would gradually slow the pace of these transactions. The central bank anticipates the full amount of $300 billion to be purchased by the end of October. The FOMC reiterated its commitment to retain interest rates at exceptionally low levels for an extended period.
Against the European currency, the US dollar edged higher during early deals on Monday. At 2:35 am ET, the dollar reached a 6-day high of 1.4639 against the euro, compared to 1.4704 hit late New York Friday. The next upside target level for the dollar is seen around 1.437.
The US currency that closed Friday's North American session at 1.6246 against the British pound rose to a 19-day high of 1.6137 at 2:35 am ET Monday. The pound-dollar pair is currently trading at 1.6168 with 1.603 seen as the next target level.
British house prices increased in September on rising confidence and dwindling stock of property, results of a closely watched survey showed Monday.
Average asking prices were up 0.6% in September from August as autumn sellers raised price expectations, the property website Rightmove reported. House prices had declined 2.2% in August after rising 0.6% in July.
Meanwhile, the latest Quarterly Bulletin from the Bank of England showed today that sustainable rebalancing in the UK and the global economy depend on structural forces, including the extent to which consumers in deficit nations remain restrained and domestic demand in surplus countries pick up.
Against the Swiss franc, the greenback traded higher during Monday's early deals. At 5:15 am ET, the dollar-franc pair climbed to a 4-day high of 1.0357, compared to Friday's closing value of 1.0305. If the pair gains further, 1.055 is seen as the next target level.
The Swiss National Bank said today in a report that the M3 money supply increased 7.7% year-on-year in August, unchanged from the previous month. A year ago, the M3 money supply was up 2.5%. The M2 money supply climbed 41.8% on an annual basis in August, faster than the 41.3% growth in the previous month.
The dollar that closed Friday's New York deals at 91.46 against the Japanese yen advanced to 92.21 at 5:15 am ET. This set a 11-day high for the dollar. On the upside, 93.4 is seen as the next target level for the dollar-yen pair.
The Conference Board is scheduled to release a report on the U.S. leading index for August at 10 AM ET. The consensus estimate calls for a 0.7% increase in the leading indicators index for the month.
News are provided by InstaForex.
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Singapore Consumer Prices Fall Further In August
Singapore's consumer price index dropped 0.3% year-on-year in August, slower than than a 0.5% fall in the preceding month, a report by Statistics Singapore said Wednesday. Economists expected a 0.4% fall.
Housing costs fell 1.6%, due to lower electricity and gas tariffs and cheaper liquefied petroleum gas (LPG). Transport and communication costs fell 0.4%, mainly due to cheaper petrol prices. Excluding accommodation costs, the consumer price index declined 0.9%.
Month-on-month, consumer prices were up 0.4%, owing to higher costs of transport and communication, clothing and footwear, as also housing and stationery items. Excluding accommodation costs, consumer prices were up 0.5%. Meanwhile, after adjusting for seasonal effects, consumer prices were up 0.4% on a monthly basis in August.
In the first eight months, consumer prices rose 0.5% compared to last year.
News are provided by InstaForex.
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Malaysia Trying To Broaden Tax Base: PM
Tuesday, Malaysian Prime Minister Najib Razak said the government intends to reduce operating expenditure and to broaden its tax base. However, the reduction in expenditure would not affect the efficiency of the government, said Najib.
The government's pump priming measure is currently costing a billion ringgit a month. The government is set to present its 2010 budget next month.
Najib, who is also the finance minister, told reporters that the government is mindful of the need to rein in the fiscal deficit. The government expects the budget deficit to fall to 7.6% of GDP this year.
News are provided by InstaForex.
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Financial Professionals Say U.S. Economy Still In Recession
Financial professionals hold the view that the U.S. economy remains in a recession, despite signs of stability in recent months, a survey said Tuesday. The survey was conducted amongst attendees of the 2009 annual conference of the Association for Financial Professionals on October 5.
Around 20% of respondents assessed that the recession will end before of the year, while 69% expect the recession to continue well into 2010. Nearly 22% expect company payrolls to shrink further, while just 14% anticipate their organization to resume hiring over the next six months.
Only 21% of financial professionals said their organization will increase capital spending in the months ahead. Majority of survey respondents expect to either maintain or further cut capital spending over the coming six months.
News are provided by InstaForex.
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Dollar Edges Lower Versus Euro, Sterling
The dollar touched a fresh yearly low versus the euro on Tuesday, even after European Central Bank President Jean-Claude Trichet and finance ministers of the sixteen Eurozone countries expressed "worries" about forex movements and voiced support for a strong U.S. dollar.
Its been a brutal stretch for the dollar of late, particularly against the euro. Amid expectations that the interest rate gap between the US and other industrialized nations will widen rapidly once the economic recovery takes hold, the dollar has fallen almost 25 cents from its 2009 highs against the euro, set back in March.
Late Monday night, the dollar dropped to 1.4993, its lowest level in more than fourteen months. The pair was little changed from that mark approaching 8 am ET.
The dollar barely budged versus most other majors ahead of data on US housing starts and producer prices. The Bank of Canada's interest rate decision may also be in focus.
While most economists expect the BoC to maintain its current overnight call rate, Australia, another resource-based economy, surprisingly hiked its key interest rate earlier this month.
Earnings news will also garner attention as participants continue to look for signs that corporations are able to grow revenues.
The dollar was stuck in the mud versus the loonie ahead of the BoC decision, inching slightly higher to C$1.0320. A surprise from central bankers in Ottawa could drive the dollar to parity with the loonie.
Against the sterling the dollar extended its 6-week low, touching 1.6446. With the loss, the buck moved further away from last week's 5-month high near 1.5700.
Choppy trading kept the dollar above the 90 mark versus the yen. Speculation that Japanese officials may intervene to weaken the yen has helped the dollar rebound after testing a 1995 low of 87.08.
Japan's leading index stood at 83.2 in August, down from the initial estimate of 83.3, the Cabinet Office reported Tuesday. However, the leading index improved for the sixth month in a row. In July, the reading was 82.5.
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IMF Upgrades Asia's Growth Outlook
Thursday, the International Monetary Fund raised Asia's economic outlook saying that the region is rapidly rebounding from the depth of the global crisis.
In its latest regional economic outlook, the Washington-based IMF said it expects Asia's gross domestic product to grow 2.8% this year and by 5.8% next year. In May, the lender had forecast Asia's growth to decelerate to 1.3% in 2009 before rebounding to 4.3% in 2010. The new forecasts are short of the 6.7% average growth recorded over the past decade.
"The primary driver of Asia's recovery has been a progressive return towards normalcy following the abrupt collapse in global trade and finance at the end of 2008," the IMF report said. According to the report, the other key driver of Asia's recovery has been the region's rapid and forceful policy response.
"The "green shoots" of recovery appear more firmly rooted in Asia than in other regions," the report said. "Now Asia is leading as the world pulls out of recession."
While raising its world economic outlook on October 1, the IMF said the world economy is expected to grow 3.1% next year, more than the 2.5% growth forecast in July. The lender expects the Japanese economy to contract 5.4% this year and to grow by 1.7% next year. Australia's growth is forecast to touch 0.7% this year and 2% next year. New Zealand's economy is predicted to shrink 2.2% in 2009 and to expand by 2.2% next year.
China is likely to log the fastest growth in the region, 8.5% this year and 9% in 2010. India is set to follow, with growth projected at 5.4% in 2009 and at 6.4% next year. Meanwhile, South Korea's economy is predicted to shrink 1% before expanding by 3.6% next year.
At the same time, the IMF today revised its outlook for Singapore to show a 4.3% expansion in 2010 after a 1.7%contraction this year. In its world economic outlook, the organization had forecast Singapore GDP to rise 4.1% in 2010 after falling 3.3% this year.
The IMF said Asian policymakers consequently face two major challenges - to maintain policy stimulus until the recovery becomes self-sustaining and to devise a way to return to sustained, rapid growth in a new global environment. It also said Asia will need to be willing to live with smaller current account surpluses and more flexible exchange rate management. Moreover, it said output in the large G7 economies is forecast to grow by 1.3% next year, recouping only half the contraction estimated for 2009, because private demand in these countries remains constrained by the legacy of the crisis.
Asia's V-shaped recovery may be the sharpest on record and may turn into a square-root-shaped recovery soon, DBS Bank economist David Carbon said in a note on Wednesday. "That is, a sharp drop, a sharp rise, and then a palpable turn sideways." The DBS economist expects growth to be back to "normal" for most of the countries in the region by the first quarter of 2010.
Carbon also expects key central banks in the region to hike rates in the first quarter. The bank forecasts India to hike rates as early as January and South Korea in the first quarter. China is expected to start pushing rates up in the second quarter as well as allow its currency to appreciate against the U. S. dollar.
Earlier in the month, Australia became the first G-20 central bank to raise key interest rate after the global financial crisis. India's central bank became the second in the group to start exiting from an easy monetary policy, though it retained key interest rates.
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