Thursday, November 30, 2006

Forex News: Core inflation in the USA +2.4% in a year, unchanged from the preceding month

The index of personal consumption expenditures excluding food and energy (core PCE) in the USA was in October +0.2%, compared with the preceding month.

In September, the rise of PCE, which reflects inflation pressures in the country, was also 0.2%. The index was expected to rise by 0.1% in October.

At the annual rate, core PCE rose in October by 2.4%, remaining unchanged from the preceding month. Although annual index of core inflation did not change in October, it exceeded the normal range of inflation pressure, which is 1.0-2.0% in the USA.

Personal income in the USA was below expectations in October

Forex News

The index of personal income in the USA rose in October by 0.4% toward the preceding month. The reading was below analysts’ expectations, who considered the income to grow by 0.5%. In September, personal income growth was 0.5%.

The index of personal income, which was below expectations, can negatively influence dollar rate. In the middle-term rate, weak data can contribute to retail sales reduction.

However, the index of personal income is analysed together with personal spending. The index of personal spending rose by 0.2%, compared with 0.2%drop in September. The index was expected to rise by 0.1%.

Forex News: Business climate in the euro area rose unexpectedly in November

The index of business climate in the euro area rose in November to 1.54 points, from 1.41 points in the preceding month (revised from 1.42). The analysts expected business climate rise to 1.42 points.

However, the index of economic sentiment, which reflects firms’ confidence in the economic situation for the sixth-month period, fell slightly in November, from 110.4 points in October to 110.3 points. The index of economic sentiment was expected to be 110.5 in November.

The index of economic sentiment in the manufacturing sector was six points, compared with five in October. Economic sentiment in services fell from 21 to 19 points.

Forex News: GBP Surges to 14-year High, USD Resumes Slide

Forex News

At 8:30 AM US October core PCE m/m (exp 0.1%, prev 0.2%) October core PCE y/y (exp 2.3%, prev 2.4%) October PCE Deflator y/y (exp 1.4%, prev 2.0%) October Personal Spending (exp 0.1%, prev 0.1%) October Personal Income (exp 0.5%, prev 0.5%) Canada Q3 GDP annualized (exp 2.0%, prev 2.0%) Canada September GDP (exp 0.0%, prev 0.3%) At 10:00 AM US November Chicago PMI (exp 54.5, prev 53.5) At 6:30 PM Japan October National CPI ex-food (exp -0.1%, prev 0.0%) Japan October National CPI (exp -0.1%, prev -0.3%)

The dollar relinquished all of its previous session’s gains versus the euro and sterling during London trading, negating any positive momentum from Wednesday’s upbeat US GDP and Beige Book report. The selling that ensued pushed the greenback to fresh 14-year lows against the sterling at 1.9578 and falling just shy of the recent low versus the euro at 1.3210. Traders remain determined to test the bearish sentiment of the market, thus ignoring any recent dollar positive news such as hawkish Fed rhetoric and evidence that the US economy may be headed for a soft-landing.

The data deluge continues today with the releases of October core PCE, PCE deflator, personal spending, personal income and November Chicago PMI. The core PCE is forecasted to slip to 0.1% from 0.2% the previous month and down to 2.3% from 2.4% a year earlier. The deflator is expected to be lower at 1.4% compared with 2.0% previously. Personal spending and income are seen unchanged from their prior month’s readings. More importantly though, will be the Chicago PMI report due out at 10:00 AM, which will be viewed as a proxy to the manufacturing ISM report also scheduled for this week. Consensus forecast is for PMI to improve to 54.5, up from 53.5 from October.

Wednesday, November 29, 2006

Forex News: U.S. core PCE price index up 2.2 pct

Forex News

The Federal Reserve's preferred measure of inflation PCE index was revised a touch lower for the quarter.

The core PCE price index, which excludes volatile food and energy prices, rose a revised 2.2 pct in the quarter, down slightly from the 2.3 pct estimated a month ago. The core PCE price index in the prior quarter was 2.7 pct.

Over the past 12 months, the core PCE price index has risen an unrevised 2.4 pct, the sharpest annual rise since the second quarter of 1995.

Forex News: USD Selling Finds Reprieve, Eyes on Data

At 8:30 AM US Q3 GDP annualized (exp 1.8%, prev 1.6%) Q3 core PCE (exp 2.3%, prev 2.3%) Q3 GDP Price Index (exp 1.8%, prev 1.8%) Canada Q3 Current Account Balance (exp C$3.7 bln, prev C$4.2bln) Canada October Raw Materials Product Price m/m (exp -0.3%, prev -1.6%) At 10:00 AM US October New Home Sales (exp 1,050k, prev 1,075k) At 2:00 PM Fed’s Beige Book

The dollar managed to find some support against the majors in early Wednesday trading following over five consecutive sessions of selling. The currency regained slight composure in the London open amid rumors of hedge fund buying, with the euro backing away from fresh 20-month highs just shy of 1.3220 to a session low at 1.3165 in which USD selling interest emerged. Although the overall outlook is bleak for the dollar, given the overextended nature of recent moves in the major currency pairs the risk for a corrective bounce remains. Thus, we maintain our bearish stance on the currency but would be wary of chasing this latest move, instead opting to wait for a retracement to initiate new short positions.

US economic data will again be the key driver of FX for today’s trading session, which will include Q3 GDP, core PCE, price index, October new home sales and the Fed’s Beige Book report. The key points of focus will be GDP and new home sales, slated for release at 8:30 AM and 10:00 AM, respectively.

Tuesday, November 28, 2006

Forex News: U.S. consumer confidence drop in November

Forex News

Uncertainty about the stability of the economy caused the second straight monthly decline in U.S. consumer confidence in November. The consumer confidence index fell to 102.9 in November from 105.1 in October. The index peaked at 105.9 in September.

The decline in confidence surprised economists, who were forecasting the index to increase to 106.4.

The present situation index fell in November to 123.6 from 125.1. This is the lowest level since last December. The index is seen as a good indicator of near-term spending plans.

The expectations index slipped to 89.2 in November from 91.9 in October. Inflation expectations fell in November.

Forex News: USD Soft Ahead of Data, Bernanke

Forex News

At 8:30 AM US October Durable Goods Orders (exp -5.0%, prev 8.3%) US October ex-transports Durable Goods Orders (exp 0.2%, prev 0.5%) At 10:00 AM US October Existing Home Sales (exp 6.15 million units, prev 6.18 million units) US November Conference Board’s Consumer Confidence (exp 106.0, prev 105.4) At 12:30 PM Fed Chairman Bernanke Speaks on Economic Outlook At 4:30 PM Fed’s Moskow Speaks At 6:50 PM Japan October Industrial Production m/m (exp -0.4%, prev -0.7%)

Traders were content in testing the extent of the market’s bearishness on the dollar, with the currency thus far unable to recoup any of its steep holiday losses. Selling resumed in early European trade as the sterling revisited its 23-month highs around 1.9460 and the euro remained propped near 1.3160. At this stage, we continue to exercise caution in chasing a move lower in the dollar as the majors have reached overbought levels and would look to sell after a corrective bounce higher has taken place. The overall outlook for the dollar, however, suggests further declines to come as a result of slowing economic growth and the outlook for global interest rate differentials.

Economic data from the US will continue to be closely scrutinized for clues on whether the economy is headed for a soft landing. The reports slated for release later in the session consist of October durable goods, existing home sales and the Conference Board’s consumer confidence survey for November. Although typically a more volatile report, durable goods orders for October does not bode well for proponents of a soft landing, which is forecasted to drop by 5.0% versus an 8.3% gain a month earlier. The ex-transportations durable goods are forecasted at a less pronounced decline from the previous month at 0.2% versus 0.5% from September.

Monday, November 27, 2006

Forex News: FX Extends Move, Awaits Normal Liquidity

Forex News

Traders extended the dollar’s plunge in the early Monday Asian session, pushing past fresh 20-month lows versus the euro near 1.3180 and 23-month lows against the sterling at 1.9467. Although we have remained bearish on the dollar throughout the second half of 2006 on the premises of narrowing global interest rate differentials and deteriorating US economic fundamentals, we deem this latest sell-off in the greenback to be too much too soon, exaggerated only by holiday-thinned market conditions.

We continue to anticipate dollar weakness over the coming months with an inevitable shift in the Fed’s monetary policy to an easing stance as early as Q1 2007, but would remain wary of selling into this latest slump on the chance for a retracement once trading conditions normalize. Additionally, we would exercise caution in chasing the move as the end of the calendar year looms with the spike in volatility possibly proving short-lived.

Nevertheless, of primary concern to currency traders and investors alike is the trajectory of the US economy and whether the Federal Reserve can successfully engineer a soft landing. Of utmost importance will be forthcoming economic figures on growth and inflation to accurately assess the duration for the Fed’s bias against inflationary pressure and clues as to when a shift to an easing stance may materialize.

Forex News: Dollar Continues to Slump

Forex News

The dollar had a dramatic slump during the weekend across the board. After breaking key resistance at 1.30 versus the euro, the greenback continued to weaken to the lowest since March 2005 at 1.3178, and also dropped to a two-year low at 1.9467 against the sterling.

The main reason behind of this five-day huge decline in the dollar is the fear of U.S. economy cooling down. The Council of Economic Advisers adjusted their forecast of GDP in 2007 from 3.6% to 2.9% because of slowing housing market. Recent weak economic data dampened investor sentiment on the dollar. According to the interest rate futures market, the bets on the Fed rate cut early next year were raised last week.

The concern over central banks' foreign exchange diversification away from the dollar also contributes to the dollar drop. Wu Xiaoling, vice governor of the People's Bank of China said in an academic paper that the reserves of East Asian countries had too much exposure to the falling dollar.

Forex News: This week’s nearest aim of euro is 1.3600

Forex News

“The situation at the Forexmarket is that large hedge bonds leave for New Year holidays,” Sergey Popov, NorthFinance financial analyst comments, “Thus, we should expect high volatility at the market and new historic readings of euro before the New Year.

This week’s nearest aim of euro is the level of 1.3600 with further rise to 1.3800 by the end of December.

We should also expect the close of British pound gap. Euro, Swiss franc and yen gaps have been already closed.

Today the correction to 1.3100 and low volatility of the market are expected due to absence of statistical data.”

Sunday, November 26, 2006

Forex News: Manila c. bank ups peso exchange rate forecast

Forex News

The Philippine central bank has upgraded its estimate for the value of the peso against the U.S. dollar next year to a range of 50 to 52 due to strong export growth, robust remittances and investment inflows.

The new assumption is more bullish than an earlier forecast range of 51 to 53 adopted by the government's economic committee, on which the central bank sits.

"Given the recent trend, the 50-52 range (to a U.S. dollar) is more realistic," Governor Amando Tetangco said at the sidelines of a conference over the weekend.

The peso hit a 4-½ year high of 44.66 against the dollar last week but later weakened to close at 49.71 on Friday, 6.4 percent up since the start of this year.

Record remittances from about 8.5 million Filipinos working overseas fuels domestic consumption and helps shield the Southeast Asian economy against external shocks.

Earlier this month, the central bank raised its estimate for total remittances in 2006 to a new peak of $13.4 billion, including about $12.3 billion sent through formal channels like banks, a 15 percent increase on last year's $10.7 billion.

Exports have been growing at a double-digit pace since the start of the year and the government expects overseas sales to beat its official export growth target of 10 percent this year.

Friday, November 24, 2006

Forex News: Dollar Reaches 1.31 vs Euro

Forex News

The dollar slid to break 1.30 level versus the euro for the first time since April 2005 on Friday and is testing 1.31 now.

The dramatic decline of the dollar was a result of accumulation of recent weak U.S. economic data. The greenback started to weaken since Wednesday after economic advisers to President George Bush cut their forecasts for economic growth next year as the housing market is cooling down. A government report released this Wednesday showed U.S. consumer sentiment also turned down. The Fed has already done with rate hike and the market is looking a rate cut some time next year.

Compared with the Fed, the European Central Bank is widely expected to raise interest rates by another 25 basis point to 3.5% by March 2007. Several ECB officials, including President Trichet, Miguel Angel Fernandez Ordonez, and Klaus Liebscher, said this week that the central bank should keep vigilant on inflation.

Forex News: Today we expect 1.3000 testing

Forex News

Georgiy Fedotov, NorthFinance financial analyst notes, “Euro tried to break through the level of 1.2980, but it didn’t. However, the currency fixed itself at its maximums. We expect the testing of 1.3000 today and the confirmation of the ascending trend. Serious macroeconomic indicators are not published today.”

Forex News: Germany IFO business climate index increases to 106.8

Forex News

According to a report published by the Ifo Institute, German business confidence index has come unexpectedly high in November, because of the improvement of German companies trading outlook.

Business climate index has risen in November to 106.8 from 105.3 in October, when the economist’s forecasts advanced a mild decline to 105.2.

Businessmen in Germany seem to have a positive outlook on the trading development for the next six months as well as on the current economic situation.

Thursday, November 23, 2006

Forex News: Dollar Slumps on Cooling Economy Speculation

Forex News

04:00 E-12 November German IFO Expectations (exp 98.8, prev 99.2) November German IFO Current Assessment (exp 112, prev 111.8) November German IFO Business Climate (exp 105.2, prev 105.3)

The greenback weakened after economic advisers to President George Bush yesterday cur their forecasts for economic growth next year. The Council of Economic Advisers said in their semi-annual forecast that a cooling housing market will bring U.S. economic growth slow down in 2007. They forecasted that GDP would increase 2.9% in 2007, slower than the June's forecast of 3.6%. The downward revision of economic forecast dampened sentiment on the dollar.

A report released early in US session turned out to be weak and finally triggered a dollar slump after two days'consolidation. U.S. weekly initial claims climbed from 308k to 321k, worse than the forecast for a reading of 310k.

The dollar extended losses following a weaker than expected reading of U.S. consumer sentiment in November. University of Michigan consumer sentiment by the end of November fell from the preliminary reading of 92.3 to 92.1, below the expectation of 93.0. The dollar was weakened to a 5-month low at 1.2956 against the euro and dropped more than 1 cent to session low at 117.38 versus the yen.

The move today may be exaggerated during this low volume trading session before thanksgiving holiday. The trading is likely to be pretty light in the rest of the holiday week. Economic data worth noting are German IFO survey due Thursday and UK third quarter GDP due this Friday.

EURUSD will face interim resistance at 1.2950, followed by 1.2980 and 1.30. Additional ceilings will emerge at 1.3050, backed by 1.31. Support starts at 1.29, backed by 1.2870, 1.2840 and 1.28. Subsequent floors are eyed at 1.2750.

Wednesday, November 22, 2006

Forex News: Oct. UMich sentiment index revised down to 92.1 vs 92.3

Forex News

According to the research from the University of Michigan, consumer sentiment in U.S. weakened slightly in late October.

The UMich consumer sentiment index inched lower to 92.1 in late October from 92.3 earlier in the month. The decline was unexpected. Economists were expecting the index to stay on its level of 92.3.

Forex News: Jobless claims in the USA are above expectations

The index of jobless claims in the USA rose in a week to November 18 to 321K, from 309K the week before (revised from 308K). The reading was above analysts’ expectations, who considered US jobless claims to rise by 310K.

The average number of jobless claims in four weeks to November 18 rose to 317K, from 314K in the preceding week. The total number of unemployed people in the USA rose by 2.454mln to November 11, from 2.440mln (revised from 2.443mln).

The increase of jobless claims is not a positive factor for dollar rate, but it is usually observed in connection with other macroeconomic indicators. In addition, American economists note that the labor market keeps its stability. At the average annual rate, jobless claims in the USA were 311K, compared with 332K in 2005.

Forex News: Euro Zone industrial orders decrease 1.3%

Forex News

According to the Eurostat agency data, new industrial orders in the European Monetary Union countries have dropped by 1.3% in September in consequence of bad figures on German and Italian orders.

This reading follows two consecutive strong increases on industrial orders, august figures have been revised up to 3.8% from the initial 3.7%. September’s fall has been smoother than expected. Economists forecasted a 2.0% decrease in orders.

In the last year, Euro Zone industrial orders have increased by 7.6%, after the increasing in August by 14.5%.

Forex News: BoE voted 7:2 for the kea interest rate increase

Forex News

Today the Bank of England published the minutes of the Monetary Policy Committee meeting held on 8 and 9 November 2006, where the members of the Committee made the decision to increase the repurchase rate by 0.25%, to the level of 5.0%. Seven members of the Committee voted for the rate increase, while two were against it.

The Committee made the decision having initially discussed major economic issues such as British financial markets, international economy, money, credit, demand and supply, as well as labor market and inflation expectations.

The report highlights that the economy of Great Britain have grown at its average pace. However, the uncertainties are around the supply, since this field has passed through the shock reflecting oil and import prices.

The majority of companies reacted with misbalance of actual costs and wages for rising oil and import prices. This was certainly reflected in lowing productivity and growing unemployment, while there are speculations that the employers can demand wages increase.

The inflation risks are also connected with the strong growth of equity prices and house prices. The credit demand has grown, which means that further asset price appreciation is to come.

The balance of risks described above can result in stronger inflation pressures, which was the reason for the Bank of England to increase the interest rate.

Forex News: The possibility of 1.2900 testing

Forex News

“The Forex market is approaching to its upper range, but on the threshold of several days-off in the USA and Japan, the volume of deals is extremely poor”, Georgiy Fedotov, NorthFinance analyst says. “In connection with that, major currency pairs accomplish spasmodic fluctuations.

There is a possibility of 1.2900 testing. The consolidation above this level will speak for high probability of ascending movement of EUR/USD.

Today the results of BoE meeting minutes on November 8-9 are published. The data on jobless claims in the USA is also released today. The analysts expect the indicator to increase to 310K, from 308K of the preceding week. According to the analysts’ forecasts, the Michigan sentiment index will keep steady at the preceding level”.

Tuesday, November 21, 2006

Forex News: Canadian Fell on Weak Retail Sales

Forex News

The Canadian dollars weakened further today after the release of two weak Canada economic indicators. Canada retail sales surprisingly dropped 1.2% in September, well below the forecast of -0.4% and the previous month's reading of 1.0%. Excluding food and energy sales, core retail sales unexpectedly fell 0.9%, disappointing the market that expected a rise of 0.1%. Canada leading indicators rose 0.2% in October, below the expectation of a 0.4% increase. The Canadian dollar lost its edge since the beginning of this month as Canada announced that it planned to tax income trusts.

USDCAD will face resistance at 1.1480, followed by 1.15 and 1.1530. Additional ceilings will emerge at 1.1550, backed by 1.1580 and 1.16. Support starts at 1.1450, backed by 1.1425, 1.14 and 1.1370. Subsequent floors are eyed at 1.1350, backed by 1.1320.

Forex News: Yen Remains Weak vs Euro

Forex News

The yen remains weak against the euro and the dollar today. Bank of Japan minutes for October monetary policy meeting released today indicated that the economy is likely to expand moderately and interest rates will be raised gradually. The outlook of BOJ rate hike is unchanged. The expectations that BOJ may raise rates early next year cannot be priced in the market until Japanese officials give a clearer signal.

USDJPY encounters interim resistance at 118, backed by 118.30 and 118.70. Subsequent ceilings will emerge at 119 and 119.30, followed by 119.50. On the downside, support begins at 117.75 and 117.50, followed by 117.30. Additional floors are eyed at 117, backed by and 116.80.

Forex News: Dollar Stuck in Narrow Range

Forex News

18:50 Japan October Adjusted Merchandise Trade Balance (exp 666.7 billion yen, prev 419.9 billion yen) Japan October Merchandise Trade Balance (exp 771.4 billion yen, prev 1013.9 billion yen) Japan September All Industry Activity Index (exp ¡V0.1%, prev 0.7%) 04:30 UK Bank of England Monetary Policy Meeting Minutes 05:00 E-12 September Industrial New Orders y/y (exp 9.3%, prev 14.3%) September Industrial New Orders s.a. m/m (exp ¡V2.4%, prev 3.7%) 07:00 Canada October Core CPI y/y (exp 1.7%, prev 1.7%) October Core CPI m/m (exp 0.1%, prev 0.5%) October CPI y/y (exp 1.0%, prev 0.7%) October CPI m/m (exp ¡V0.1%, prev ¡V0.5%) 08:30 US Weekly Initial Claims (exp 310k, prev 308k) 10:00 US University of Michigan Consumer Sentiment-Rev. (exp 93, prev 92.3)

The market is pretty quiet and most currency pairs are trading in narrow ranges before Thanksgiving. The EUR/USD pair is moving between 1.28 and 1.2850 on Tuesday. The euro is firm after ECB chairman Trichet stressed inflation risks on G-20 over the weekend. The market will focus on University of Michigan consumer sentiment due tomorrow.

EURUSD will face interim resistance at 1.2850, followed by 1.2870 and 1.29. Additional ceilings will emerge at 1.2930, backed by 1.2950. Support starts at 1.28, backed by 1.2765, 1.2730 and 1.27. Subsequent floors are eyed at 1.2650.

Forex News: CBI industrial order books balance -6%

Forex News

According to the CBI’s latest monthly industrial trends survey published today, the industrial order book balance in Great Britain was -6% in November. The balance is the difference between the percent of manufacturers reporting an increase and those reporting a decrease.

It is important to note that in the preceding month the industrial order book balance was -20%. The analysts expected the indicator to narrow down to -14%. The growth of industrial orders was observed in all sectors, while the capital goods sector was the strongest.

The balance of export orders was +3%, the first positive balance since February 1996. In October the balance of export orders was -11%. The increase was unexpected and the highest since 1995.

Forex News: U.S. Oct. leading indicators increases 0.2%

Forex News

Indicator of future economic growth shows the U.S. economy should continue to develop at a slow pace.

The index of leading economic indicators increased 0.2% in October. The rise of the index was slightly below the expectations of analysts. Economists had forecasted a 0.3% growth.

In September, the index of leading economic indicators was revised to a 0.4% gain from the initial estimate of a 0.1% rise. The coincident index rose 0.1% in October, while the lagging index rose 0.2%.

Monday, November 20, 2006

Forex News: Dollar Gained on Firm Leading Indicators

Forex News

00:00 Japan Bank of Japan release minutes for October policy meeting 08:30 Canada October Leading Indicators (exp 0.4%, prev 0.4%) Canada September Retail Sales (exp ¡V0.4%, prev 1.0%) Canada September Core Retail Sales (exp 0.1%, prev 0.4%) 18:50 Japan October Adjusted Merchandise Trade Balance (exp 666.7 billion yen, prev 419.9 billion yen) Japan October Merchandise Trade Balance (exp 771.4 billion yen, prev 1013.9 billion yen) Japan September All Industry Activity Index (exp ¡V0.1%, prev 0.7%)

The dollar gained slightly following a sharp upward revision of U.S. September leading economic indictors. The October figure came in line with the expectation at 0.2%, and the September initial reading of 0.1% was revised up to 0.4%, indicating the economy is likely to remain in good shape and a soft landing is expected. The greenback strengthened from around 1.2830 to 1.2810 after the release of the data.

The market is likely to trade quietly during this Thanksgiving week. A key economic indicator worth noting is German IFO survey due this Wednesday.

Forex News: The UK budget deficit (PSNCR) was largely down in October

Forex News

The UK budget deficit (PSNCR) was -8.4bln stg in October, the National Office of Statistics reported today. The index was expected to reduce to -4.6bln stg, compared with +12.3bln in September.

The annual balance of the country’s incomes and spending improved, reflecting positive changes in the monthly picture. In October 2006, the surplus of public sector budget was 4bln stg, compared with 2.3bln ) in October 2005.

It is important to note that the public sector recorded surpluses as far back as in the period of 1998/9-2001/2 fiscal years. Since 2002/3 to September 2006, the National Office of Statistics recorded deficits

Forex News: 2-Gold rises as jewellers buy, platinum up nearly 2 pct

SINGAPORE, Nov 20 (Reuters) - Gold firmed on Monday after last week's drop in prices spurred buying from jewellery makers in the run up to Christmas, while platinum reversed losses and gained nearly 2 percent on fund buying.

Spot gold hit a high of $624.50 an ounce and hovered at $623.10/624.10 by 0713 GMT, higher than $621.10/622.10 late in New York.

Gold fell to ts lowest in nearly a week around $614 on Friday before bouncing back on a weaker dollar and as oil trimmed losses.

"Physical demand is there and it will help underpin it a little bit, but it's probably not going to drive it higher," said Darren Heathcote of Investec Australia in Sydney.

"The real big movement is coming from the investment funds at the end of the day. We'll probably find support around $614, with a cap for the time being probably somewhere around $625," he said.

Gold has lost around 2 percent in value since rallying to a two-month high of $636.50 on Nov. 10 on a weaker dollar and news that China plans to diversify its foreign exchange reserves.

The euro inched up to $1.2840 from around $1.2830 in late U.S. trade.The dollar climbed to 117.90 yen from around 117.75 yen in New York on Friday, when it fell on soft U.S. housing starts data and on rumours, later denied, that a U.S. hedge fund was in trouble.

Platinum rose to $1,207/1,212 an ounce from $1,185/1,191 in New York, driven by renewed buying from investors in Japanese futures as well as jewellers ahead of Christmas.

Key Tokyo Commodity Exchange platinum for October 2007 delivery <0#jpl:> rose 85 yen to 4,402 yen a gram by the close. The contract fell as low as 4,288 yen on Friday, a one-week low.

Cash platinum tumbled to a two-week low of $1,138 on Friday as investors ditched the metal following a supply and demand report by Johnson Matthey, the world's top platinum distributor.

Last week's report said that supply and demand for platinum were likely to reach record levels in both 2006 and 2007, leaving the global market close to balance.

"This is a good time for jewellers to buy gold and platinum because they have to prepare for Christmas demand. That will offer good support for prices," said a dealer in Tokyo.

"The upside target for gold is $640 and we should reach that level by the end of the year. It may even trade higher than that," said the dealer, referring to a level last seen in September.

Tatsuo Kageyama, an analyst at Kanetsu Asset Management, said chances of a recovery in the precious metals market would largely depend on oil prices.

"The prospect of precious metals would depend on whether or not the slide in crude oil prices halts," he said.

Benchmark gold futures <0#jau:> on the Tokyo Commodity Exchange ended 16 yen per gram higher at 2,395 yen per gram, reflecting gains in cash gold.

Silver edged up to $12.82/12.89 an ounce from $12.75/12.82 late in New York.

Palladium was unchanged at $317/322 an ounce. (Additional reporting by Risa Maeda in Tokyo)

Sunday, November 19, 2006

Forex News

Forex News

China cannot rule out interest rate hikes in coming months - PBoC advisor
BEIJING (XFN-ASIA) - China cannot rule out the possibility of further
interest rate hikes in the coming months, the 21st Century Business Herald
reported, citing central bank advisor Fan Gang.

Japan to slightly downgrade economic assessment - report
TOKYO (XFN-ASIA) - The Japanese government is expected to downgrade its
monthly assessment of the domestic economy for the first time in 23 months when
it releases a report on Wednesday, local reports said.

G20 economic leaders call for resumption of WTO trade talks
MELBOURNE (XFN-ASIA) - A meeting of the world's most powerful economic
leaders called for the early resumption of stalled World Trade Organization
(WTO) talks and warned against rising protectionism.

G20 to continue pushing for IMF, World Bank reform
MELBOURNE (XFN-ASIA) - The world's most powerful economic leaders vowed to
maintain pressure on the International Monetary Fund (IMF) and World Bank to
better reflect the global community.

G20 economic leaders call for energy investment and efficiency2
MELBOURNE (XFN-ASIA) - Group of 20 (G20) economic leaders said strengthening
energy markets and promoting investment and efficiency are needed to ensure the
global energy supply keeps up with soaring demand.

APEC summit wraps up; trade, NKorea in focus
HANOI (XFN-ASIA) - Key Asia-Pacific leaders called for an urgent resumption
of stalled global trade talks but struggled for consensus on North Korea as they
wrapped up their summit in Vietnam.

US will not tolerate nuclear proliferation by NKorea - Bush
WASHINGTON (XFN-ASIA) - US President George W. Bush warned that the United
States and its allies will not tolerate transfers of nuclear technology by North
Korea to hostile regimes and terrorist groups.

Saturday, November 18, 2006

Forex News: Weak Data Is Only Beginning to Hurt the US Dollar

Forex News

Action speaks a lot louder than words and even though the NAHB housing market index reported stronger sentiment among builders yesterday, the sharp drop in housing starts and applications for building permits that were reported today basically nullified the previous release. The number of new building projects that broke ground in the month October fell to a six year low as demand wanes and cancellation becomes the new buzz word in real estate. Building permits also fell for the eighth straight month, indicating that there are even fewer projects in the pipeline. The surprising rise in the NAHB index was the primary reason why the dollar managed to rally yesterday in the face of weaker economic data. The market thought that the housing sector was bottoming out, when it really isn’t. We had a tremendous amount of data released over the past week and we have learned that even though the Fed remains hawkish, the trade picture was worse than expected, inflationary pressures are falling, the housing market remains fragile and consumer spending is beginning to see some real signs of weakness. None of this is good news for the US dollar and should push the Federal Reserve further away from their current stance and give them no choice but to be more neutral with their take on inflation and outlook for monetary policy. The lack of economic data next week should keep the market relatively range bound. Volatilities are low and will probably continue to remain low. However, aside from the drop in the Japanese Yen crosses, there are growing signs that the carry trade faces risk – see our Japanese Yen section for more details. Meanwhile aside from leading indicators, there is nothing of consequence on the US calendar next week. It will also be a shortened trading week with the US markets closed for Thanksgiving Day on Thursday.

Forex News: Yen Rises on Fear of Carry Trade Liquidation

Forex News

Talk of carry trade liquidation is helping to send the Japanese Yen higher today. This is something that everyone needs to start getting use to as carry trades face greater risks. Today’s move was sparked by rumors that a large hedge fund needed to bail out of their carry trades to fund bad energy bets. That was later denied by the hedge fund in question, but nonetheless reinforces a worry in the FX market. The G-20 meeting is being held in Melbourne Australia this weekend along with the BIS meeting. The last time we heard from central bankers at one of these meetings, their comments were mostly targeted at the Japanese Yen. We would not be surprised to hear the same this time around. With EUR/JPY above 150 and USD/JPY not far from its recent highs, we expect government officials to continue to be critical of the weakness of the yen, which would be positive for the currency and exacerbate its strength. Futures traders have already begun to pile out of their short yen positions as indicated by the latest IMM report. The Icelandic Krona, which is another popular carry currency, is already beginning to see an unwinding, which may be a sign of what may be to come for the Yen.

Forex News: Trade balance in the euro area +2.0bln euro in September

Forex News

As Eurostat, the Statistical Office of the European Communities reported today, the trade balance surplus in the euro area was 2.0bln euro in September, which exceeded the analysts’ forecasts, who expected the deficit of 2.5bln euro, resting the expectations on August reading.

Let us remind that in August the trade balance deficit in the euro area was 5.4bln euro (5.8bln were reported earlier).

At the annual rate, exports rose by 2.0% in September, while imports fell by 0.1%. The substantial surplus of trade balance in the euro area is a positive factor for euro rise toward other currencies. The positive data may seriously influence the market.

Friday, November 17, 2006

Forex News: Dollar Drops after Soft Housing Data

Forex News

The dollar dropped after a report showed U.S. housing market is cooling down, raising concern over the U.S. economy. The dollar weakened to 1.2844 versus the euro and moved down to 117.53 against the yen.

The building permits dropped from 1638k to 1535k in October, the lowest since December 1997. Housing starts declined from 1772k a month earlier to 1486k, also coming in short of the expectation of 1680k. Soft housing figures weigh on the dollar, however, the greenback is supported as the market still think the chance of a Fed rate cut by the first quarter next year is very low based on strong manufacturing growth. The dollar is trading in the narrow range between 1.2810-1.2840 in late U.S. session.

Besides, though many oversea central banks, including China, Russia, Swiss and Middle East countries planned to diversify their foreign exchange reserves away from the U.S. dollar, the impact of this on FX market is limited.

Forex News: U.S. Oct. new construction of homes down 14.6%

Forex News

Home builders retreated on a massive scale in October, dashing hopes for a quick turnaround in the housing market.

Starts of new homes plunged 14.6% in October to a seasonally adjusted annual rate of 1.486 million, the lowest level since July 2000. Building permits fell 6.3% to a seasonally adjusted annual rate of 1.535 million, the lowest level in nine years.

Housing starts are now down 27.4% from October 2005 levels. Building permits are down 28% year-on-year.

The decline in October was much larger than expected by economists, who were forecasting a 4.5% drop in starts to 1.69 million. Building permits were expected to fall marginally to 1.62 million.

September's starts data were revised lower. Starts were revised to 1.74 million from 1.77 million. Permits were revised higher to 1.638 million from 1.620 million.

Forex news: Philadelphia Fed Index rose substantially in November

Forex news
The index of business activity of the Federal Reserve Bank in Philadelphia, which reflects the survey among manufacturers concerning their attitudes to current economic situation, rose to 5.1 points in November. The analysts expected Philadelphia Fed Index to rise to 5.0 points this month.

In October, the index was -0.7, while the reading below zero shows slowing economic development. Despite the general growth of Philadelphia Fed Index in November, the component, which reflects business outlook for the period of six months, dropped considerably, from 16.7 to 2.4.

In addition, Philadelphia Fed index still preserves low levels, compared with its maximum reading 18.5 points in August 2006.

It is important to note that Philadelphia Fed Index is published before NAPM and partly reflects the level of business activity at the national level.

Thursday, November 16, 2006

Forex news: Dollar Firm after Philly Fed

Forex news

The dollar stays firm after a report showed that manufacturing activity in Philadelphia region grew in line with the expectation. Philadelphia¡¯s manufacturing index came in at 5.1, reversing the negative reading of ¨C0.7 in the prior month. The greenback was trading under 1.28 level versus the euro and above 118 against the yen after the release of the strong manufacturing report. Interest rate futures pricing indicated traders see a 6% chance that the Fed will cut interest rates to 5%, down from around 30% before the release of the data.

Earlier in U.S. session, the dollar weakened across the board as U.S. CPI came in weaker than expected. As a key inflation indicator, CPI unexpectedly fell 0.5% in October. Excluding food and energy costs, core CPI declined from 0.2% to 0.1% in October, lower than the forecast for a 0.2% reading. However, the market expectations for a rate cut by the Fed were kept low as two Fed officials talked down this possibility today. St. Louis Fed President William Poole and Chicago Fed President Michael Moskow today both indicated that some additional firming of policy might be needed to curb the inflation, reducing the expectations for a rate cut in the first quarter next year.

U.S. net foreign security purchases $53.7 billion in September, below the expectation but sufficient to cover the trade deficit. The dollar gained as the market interpreted the number as strong-enough appetite for dollar denominated assets.

Forex news: U.S. industrial production rose 0.2% in October, the Federal Reserve reported Thursday. The gain was just below forecasts.

Forex news

U.S. industrial production rose 0.2% in October, the Federal Reserve reported Thursday. The gain was just below forecasts.

Economists were expecting production to rise 0.3%.

Capacity utilization rose to 82.2% from a revised 82.1% in September. Economists had forecast capacity utilization to rise to 82.0.

Industrial production is up 4.9% in the past 12 months.

Wednesday, November 15, 2006

Dollar Climbed on Strong Manufacturing Data, Awaits CPI

The dollar edged higher earlier across the board after a survey showed manufacturing activity in New York area expanded. New York Fed Empire manufacturing index surprisingly rose from 22.9 a month earlier to 26.66 in November, exceeding the consensus forecast of 15. After climbing slightly on the strong figure, the dollar is mainly trading in the range ahead of the release of U.S. CPI.

The market will focus on U.S. CPI report due tomorrow at 8:30 EST. CPI, a key inflation gauge, is expected to be slightly improved from ¨C0.5% to -0.3% in October. Excluding food and energy costs, core CPI, is forecasted to keep growing at a monthly rate of 0.2%. Recall yesterday PPI, a less important inflation measure, came in weaker than expected and triggered a dollar tumble. If we see a soft number tomorrow, it will be interpreted that the inflation is tame and lead to a dollar sell off.

EURUSD will face interim resistance at 1.2830, followed by 1.2850 and 1.2870. Additional ceilings will emerge at 1.29, backed by 1.2950. Support starts at 1.28, backed by 1.2770, 1.2750 and 1.27. Subsequent floors are eyed at 1.2650.

Tuesday, November 14, 2006

Dollar Tumbled on Weak PPI

The dollar slumped across the board earlier on weak inflation and retail sales reports that raised the concern that U.S. economy is slowing down. The dollar weakened from 1.2870 against the euro and 117.25 versus the yen after the release of the weaker-than-expected U.S. data.

One of the inflation gauges, PPI, surprisingly fell at an annual rate of 1.6% in October, well below the expectation of a ¨C0.6% decline, indicating the inflation is decelerating. Excluding food and energy costs, core PPI also came in unexpectedly weak at ¨C0.9% following a 0.6% rise in the prior month. We will look to the more important inflation report, CPI report due this Thursday, for more clues on U.S. inflation outlook.

U.S. retail sales fell 0.2% in October after a downwardly revised 0.8% decline in the previous month. Excluding auto sales, core retail sales declined 0.4%, exceeding the forecast for a 0.2% fall.

Monday, November 13, 2006

The EUR/USD kickback toward 1.2800 is possible

“We have come to maximums of EUR/USD. Further movement is unlikely to take place”, Artem Enshin, NorthFinance analyst considers. “At the middle-term rate, current resistance levels will not be surmounted, the kickback to 1.2800 is possible. As for British pound sterling, the currency is close to its maximums and preserves substantial potential at this stage.

Gold continues its quality rise. I consider, it will further rise toward $660/oz. Oil prices have been around %60/a barrel for a month and two weeks, the changes are not expected.

The week is rich in news:

Thus, today we expect the UK data for October. The producer price index (output and input) was down last month by 0.3%, having decreased for the first time since December 2005. The producer price index (output) was 0.3% in a month and 1.8% in a year. The input September indicator was -1.8% and 5.2%, in a month and year respectively. The major reason for producer prices’ fall was the considerable reduction of energy prices during the period under report.

On Wednesday, the ILO Jobless rate in Great Britain for three months of September is published. The preceding reading was 5.5%.

On Thursday, Eurostat publishes its data on harmonized CPI. The index was 0.0% in September.

US TICS is also published on Thursday. The volume of assets’ purchases was up to 116.8bln in August, against 32.9bln in July. The analysts expect index reduction to 62.5bln in September”.

Sunday, November 12, 2006

French economic growth unexpectedly slowed down in the third quarter

As the data of the GDP in France showed, the economic growth in France unexpectedly stagnated in the third quarter, after the most expensive paces of development in the preceding quarter.

The preliminary GDP in France was 0.0% in the third quarter, against +1.2% in the second quarter. The economists expected French GDP to amount to 0.5%.

Undoubtedly, negative data of GDP in the third largest economy of the world will find its reflection in the macroeconomic indicators of European economic growth. The paces of economic growth were down due to abrupt slump in manufacturing activity. Industrial production was down by 0.1% in the third quarter, reflecting unexpected 0.9% drop in September.

European sales of French automobiles decreased this quarter. Thus, the incomes of such leading auto manufacturers as Peugeot will fall this year.

Saturday, November 11, 2006

Dollar Stays under Pressure on Reserves Diversification Concern

The dollar remains weak against major rivals Friday on concerns over central bank reserve diversification. People's Bank of China announced yesterday that it planned to diversify its $1 trillion foreign exchange reserves, putting the dollar under pressure. The dollar weakened to a 2 ½ month low at 1.2899 against the euro and a 18-month low at 1.9176 versus the sterling.

Chinese central bank governor Zhou Xiaochuan attended a European Central Bank conference today with several other central bankers, including Federal Reserve Chairman Ben Bernanke. Zhou said China was considering investing its reserves in currencies, investment instruments, including emerging markets. But he said China would stick to the existing diversification policy. Central banks over the world seem to diversify their foreign exchange reserves away from the dollar. This provides the market to sell the dollar amid the light economic calendar.

EURUSD will face interim resistance at 1.2865, followed by 1.29 and 1.2930. Additional ceilings will emerge at 1.2950, backed by 1.2970. Support starts at 1.2830, backed by 1.28, 1.2770 and 1.2750. Subsequent floors are eyed at 1.27.

Friday, November 10, 2006

Yen Firms on Jawboning

At 12:00 AM Japan September core Machinery Orders (exp 0.9%, prev 6.7%)

The dollar remains mired near its one-month low against the euro around 1.2860 and continues to trade on a weaker footing versus the majors. Renewed concerns over central bank diversification lead the greenback’s decline, with China reiterating its intentions of diversifying away from its massive dollar reserves. Several countries have already taken action to diversify their FX reserves, and the trend appears to be gaining momentum. Although a mass exodus away from the US dollar as the reserve currency of choice will unlikely materialize, the trend to shift their FX holdings will indeed maintain pressure on the greenback.

Moreover, expectations for global interest rate differentials will also continue to drive foreign exchange moves over the coming months. With lingering uncertainty over the duration the current FOMC pause in monetary policy, particular analysis will be made of forthcoming US economic data, specifically inflation reports. Commentary from Fed officials will also continue to be closely scrutinized. Fed Chairman Bernanke is expected to speak at the ECB conference at 8:45 AM New York time and traders will break down his comments for fresh clues as to the Fed’s policy direction and outlook on the economy.

Thursday, November 09, 2006

Dollar Fell on China Reserves Diversification Announcement

The dollar fell across the board after Chinese central bank announced that it was planning to diversify its foreign exchange reserves. The dollar reached a two-month low at 1.2847 versus the euro.

Chinese central bank governor Zhou Xiaochuan said China was considering lots of instruments to diversify its $1 trillion of reserves. Besides China, other countries, such as Swiss and Russia, announced they would diversify reserves away from the dollar before.

In the early morning session, the dollar gained slightly on narrowed trade deficits and dropped back on weaker-than-expected consumer sentiment. U.S. trade deficit narrowed from 69.9 billion to 64.8 billion September, better than a forecast of 65.7 billion. Weekly jobless claims fell from 327,000 to 308,000, better than the forecast of 315,000. University of Michigan consumer sentiment fell from 93.6 to 92.3 in November, below the expectations of a 93.4 reading.

BoE Decision Eyed

At 7:00 AM Bank of England Policy Decision (exp 5.00%, prev 4.75%) At 8:30 AM US Weekly Jobless Claims (exp 315k, prev 327k) US September Trade Balance (exp -$65.7 bln, prev -$69.9 bln) Canada September Trade Balance (C$3.4 bln, prev C$ 4.2 bln) At 9:45 AM November University of Michigan Consumer Sentiment (exp 93.4, prev 93.6)

Foreign exchange remains locked in familiar ranges in spite of the US mid-term elections and continued jawboning from global central bank officials. The greenback hovers on a soft tone against the majors near 1.2760 versus the euro and 1.9040 against the pound sterling. The session ahead will see several economic events that could potentially push the major pairs away from its range, with the key highlights seen as the Bank of England’s monetary policy announcement at 7:00 AM New York time and the US September trade deficit due out at 8:30 AM.

US economic reports include weekly jobless claims, September trade deficit and the November University of Michigan consumer sentiment report. Jobless claims are forecasted to slip to 315k, from 327k a week earlier. The September trade deficit is seen shrinking to $65.7 bln, down from the record $69.9 bln from August. Lastly, the November University of Michigan consumer sentiment is expected to slip marginally to 93.4 from 93.6 a month earlier.

Wednesday, November 08, 2006

Dollar Consolidates !!

The dollar is trading in a narrow range between 1.2750- 1.28 after the Democrats took control of the U.S. House of Representatives and the battle for the Senate still hangs in the balance. As we said before, the impact of election is limited as the fiscal policy is not likely to change in near term. The market focus shifted back to fundamentals and central bank¡¯s rates outlook.

The euro was little changed after a report showed Germany¡¯s current account surplus in September widened to 9.4 billion euros from 2.4 billion in the previous month.

Besides, Bank of England is expected to raise rates from 4.75% to 5.00% on its policy meetings Thursday.

Dollar Drifts Amid Central Bank Talk

At 12:00 AM Japan September Leading Index (exp 20.0, prev 18.2) At 2:00 AM Germany September Current Account Balance (exp E6.5 bln euros, prev E2.4 bln euros)

The dollar was softer in early Wednesday trading as the results of the US mid-term elections remain unclear. Currencies have been driven by central bank expectations, with yesterday’s comments from FOMC officials tempering market anticipation for policy easing. Moreover, the yen benefited from hawkish rhetoric by BoJ Governor Fukui, who stressed the importance of pre-empting risks with policy action rather than waiting for inflation to build up – which would result in unwanted swings in the economy.

The G7 economic calendar for the coming session remains light, with only the release of Japan’s September leading index and Germany’s current account balance. The key highlights are due out on Thursday, which includes the BoE rate decision.

Tuesday, November 07, 2006

U.S. ICSC retail sales index up 1,0 %

The sales in U.S. networks of retail trade index, counted by the ICSC International council of shopping centers together with UBS, increased for 1,0 % by the week to November, 4th in compare with the last week.

The indicator is corrected in view of seasonal fluctuations and pays off on the basis only of those shops which carried out the activity in both compared periods. The last week the sales dropped by 0,2 %.

In annual expression retail sales index have increased for 2,3 % in a week by November, 4th. Last week this parameter has made +2,3 %.

Technorati Profile

Dollar Weakened During Election Uncertainty

The dollar fell across the board as some investors took profits on the dollar positions before the result of U.S. midterm elections. The euro broke 1.28 level against the dollar in the U.S. session and returned back to around 1.2770 later.

The dollar ended its rally since last Friday on strong jobs report. Though the election is not likely to shake the market too much, the uncertainty of the election result became a reason for profit taking and the dollar was pushed lower.

Two Fed regional president, Moskow and Pianalto yesterday talked down the expectations for a rate cut by next March. They indicated that the Fed might need to raise rates again to curb inflation. Interest rate futures pricing indicate traders see only 11% chance the Fed will cut the interest rate by the end of next March.