2010/08/10 17:47DJ Swiss Govt: Confident It Can Evaluate UBS Data Before Aug 26
ZURICH -Switzerland's tax office is confident it can evaluate close to all 4,450 sets of confidential UBS AG (UBS) client data before an Aug. 26 deadline to hand over the data to U.S. officials, a Swiss government spokeswoman said Tuesday.
2010/08/10 17:04DJ German Think-Tank IWH Sees 2010 GDP Around +2.5% - Report
BERLIN -The German economy will likely grow by 2.5% this year, the economic expert at Halle-based think tank, IWH, told Tuesday's Berliner Zeitung. IWH had previously forecast 1.8% growth for this year. 'Economic growth will likely head toward 2.5% for the year as a whole,' IWH's economic export Udo Ludwig was quoted as saying. The more upbeat outlook is due to strong demand from China, India, Brazil and Russia for German goods. German Economics Minister Rainer Bruederle has said GDP growth will surpass 2% this year, rather than the 1.4% forecast in April. Newspaper Web site: http://www.berliner-zeitung.de
2010/08/10 16:58=DJ DATA SNAP: UK Global Trade Deficit Narrows More Than Expected
LONDON -The U.K.'s global goods trade deficit narrowed more than expected in June as the value of both exports and imports rose to their highest level in almost two years, official data showed Tuesday. The goods trade deficit shrank to GBP7.4 billion in June from a downwardly revised GBP8.0 billion in May, the Office for National Statistics said. Economists were expecting the deficit to shrink to GBP7.8 billion, according to a Dow Jones Newswires survey last week. Exports rose 4.3% from May to GBP22.4 billion, the highest level since July 2008. Exports to non-European Union countries hit their highest level since records began in 1998, while exports to the U.S. hitting their highest level since that series began in 1988. However, imports also gained, rising 1.0% to GBP29.8 billion, the second highest level on record after July 2008's GBP31.0 billion. The ONS said the goods trade deficit with non-European Union countries shrank to GBP4.3 billion in June from GBP4.5 billion in May. The deficit with EU countries also narrowed, to GBP3.1 billion from GBP3.5 billion. The U.K.'s total trade deficit narrowed to GBP3.3 billion from GBP3.8 billion in May, the smallest deficit since February. The trade surplus in services shrank to GBP4.1 billion from GBP4.2 billion. ONS Web site: www.statistics.gov.uk
2010/08/10 16:32*DJ UK Jun Non-EU Trade Balance Forecast At Deficit GBP4.5B
2010/08/10 16:32*DJ UK May Non-EU Trade Balance Unrevised At Deficit GBP4.5B
2010/08/10 16:31*DJ UK Jun Adj Non-EU Trade Deficit GBP4.3B
2010/08/10 16:31*DJ UK Jun Adj Global Goods Trade Deficit GBP7.4B
2010/08/10 16:31*DJ UK Jun Global Goods Trade Bal Forecast At Deficit GBP7.8B
2010/08/10 16:31*DJ UK May Global Trade Deficit GBP8.0B Rev Vs Deficit GBP8.1B
2010/08/10 16:16DJ JGB Futures Down On Hedge Selling Ahead Of FOMC, 5-Yr JGB Tender
TOKYO -Japanese government bond futures fell Tuesday on hedge selling that was more active than usual, as dealers said tomorrow's five-year JGB tender results depends entirely on whatever policy decision the U.S. central bank makes later Tuesday. Japan's Ministry of Finance will auction Y2.4 trillion of five-year JGBs Wednesday, and analysts expect the coupon on the notes to be 0.3% or 0.4%, compared with 0.4% at the previous offering in July. Demand for Japan's five-year sovereign bonds has been strong recently, as banks see the assets as a good vehicle to invest excess cash in hand. Most analysts believe tomorrow's auction will also meet strong bids for the same reason. Still, some investors were cautious that the auction may get only poor demand if a Federal Open Market Committee meeting, due to end later Tuesday, unexpectedly produces no easing measures, dealers said. Expectations are growing that the Fed could reinvest funds raised from maturing mortgage-bond holdings, rather than paring the size of its investment portfolio. But dealers can't rule out the chance the Fed will take no action. 'Everybody is eagerly awaiting the FOMC verdict, and market conditions--including those of JGBs--could change drastically after the gathering,' said RuiXue Xu, a rates strategist at RBS Securities Japan. And since dealers have no concrete bets on what exactly the Fed will do, just-in-case hedging demand ahead of the after-FOMC market, including the auction was strong, Xu said. As of 0600 GMT, lead September JGB futures fell 0.20 to 141.93, while the benchmark 10-year JGB yield was up two basis points to 1.035%. Still, in the longer term, demand for JGBs should remain solid, said Mizuho Securities' chief market analyst Testsuya Miura. That is because the recent slowdown in Japanese exports suggests the economy will face a period of slower growth ahead, likely capping the country's share prices. That in turn keeps demand for JGBs higher, Miura said. Elsewhere in the curve, the two-year JGBs weren't traded, while the five-year yield was up one basis point to 0.345%. The 20-year yield was up 1.5 basis point to 1.665% and the 30-year yield was up one basis point to 1.680%.
2010/08/10 16:07DJ BOJ Gov Shirakawa: Yen Strength Could Have Big Impact On Economy
TOKYO -Bank of Japan Gov. Masaaki Shirakawa voiced caution against recent yen rises on Tuesday but said the Japanese economy's recovery scenario is still intact.The central bank thinks the yen rise "is a factor that could have a big impact on the economy," although it has to look at various aspects including the state of the global economy, business sentiment and financial conditions when examining the impact of foreign exchange, Shirakawa told reporters after a regular press conference.Still, he thinks the Japanese economy is moving in line with its outlook report issued in April.Earlier in the day, the BOJ's policy board decided to leave its super-easy monetary policy and its economic assessment unchanged, saying the domestic economy "shows further signs of a moderate recovery" on the back of improvement in overseas economies.
2010/08/10 15:59DJ Tokyo Shares End Down As BOJ Mum On Yen, China Worries Fester-2-
TOKYO -Tokyo stocks fell on Tuesday as disappointment over the Bank of Japan's passive posture on the yen and less-than-encouraging Chinese economic data pulled down global cyclical shares such as TDK and Fanuc.The Nikkei 225 Stock Average fell 21.44 points, or 0.2%, to 9551.05. The Topix index of all the Tokyo Stock Exchange First Section issues also slid 2.94 points, or 0.3%, to 854.68, with 26 of 33 subindexes ending in negative territory.Trading volume continued to be relatively light at about 1.477 billion shares, though above Monday's year-to-date-low 1.254 billion share tally, as some investors continued to stay sidelined ahead of an anxiously-awaited policy announcement from the U.S. Federal Open Market Committee (FOMC), expected later in the global trading day.Shares rose from the opening bell as select exporters were bought on the dollar's slightly firmer value against the yen. But the gains disappeared in the early afternoon after the BOJ's policy board maintained its interest rate target while standing pat on its "moderate recovery" view of the economy."It seems like an overly optimistic outlook when the economy looks inclined to deteriorate," said Masayoshi Yano, senior market analyst at Meiwa Securities, noting the need for BOJ Governor Masaaki Shirakawa to at least issue a verbal warning over the recent appreciation of the yen when he holds a press conference after market close.Okasan Securities strategist Hideyuki Ishiguro warned that without a clear signal from the BOJ, the Nikkei could fall as far as the 9200 level if the dollar slides below Y84.82--mark last reached on November 27 and a 14-year low. Speculation is growing that the FOMC will implement additional monetary easing steps, which could facilitate still more dollar weakness.TDK was the single heaviest-weighted drag on the Nikkei, dropping 1.7% to Y4,880. Real estate shares also dragged, as Sumitomo Realty & Development fell 2.3% to Y1,637 and rival Mitsui Fudosan slid 1.2% to Y1,356, partially on profit-taking following their recent sharp rises.Industrial robot maker Fanuc slid 0.6% to Y10,110, partly after concerns over the Chinese economy were rekindled from the release of weaker-than-expected July import data.Towa Pharmaceutical dropped 7.3% to Y4,905 in heavy volume after the firm reported a surprise 8.8% percent operating profit decline in its April-June quarter, which flew in the face of the expanding domestic generic drug market.Some investors fled to the safety domestic demand-driven shares amid the prevailing currency jitters. KDDI gained 1.6% to Y434,000 and heavyweight Fast Retailing advanced 0.3% to Y13,320.Semiconductor production equipment maker Disco jumped 5.6% to Y5,070 and Mitsubishi Materials climbed 5.1% to Y249 on their stellar fiscal first-quarter earnings and respective outlook hikes.September Nikkei 225 futures closed down 20 points, or 0.2%, at 9540 on the Osaka Securities Exchange.
2010/08/10 15:57DJ Japan MOF: Government Debt Tops Y900 Tln At End Of June - Kyodo
TOKYO -The outstanding balance of Japan's central government debt hit a record high of Y904.08 trillion at the end of June, Kyodo News reported Tuesday, citing the Finance Ministry.It is the first time that the balance has exceeded the Y900 trillion line.-0
2010/08/10 15:44DJ PRECIOUS METALS: Gold Down Slightly In Asia On Dollar Strength
SINGAPORE -Gold fell slightly in Asia Tuesday, finally succumbing to a stronger U.S. dollar after trading in a very tight range for much of the session. Uncertainty over a U.S. Federal Reserve meeting later in the day is keeping participants guessing. The Federal Open Market Committee's interest rate decision is due at 1815 GMT, with market participants watching whether it revises its outlook for U.S. economic growth, chooses to reinvest $200 billion in proceeds from its maturing mortgage and agency debt portfolio back into Treasurys, launches a heftier bond-buying program, or does nothing. Mitsui said the Fed is 'expected to acknowledge the deteriorating economic conditions in the U.S., but are not likely to make any significant changes as yet.' Any dovish policy change is likely to support gold, Phillip Futures said in a note. 'The Fed is likely to sound even more dovish and possibly announce plans for more quantitative easing to stimulate the economy. Gold benefits in a low interest rate environment. Hence, the downside may be capped and we may see gold edge higher,' the broker said. However, currency traders appeared to be betting on the status quo, with short dollar positions being covered. At 0640 GMT, the euro was trading at $1.3164 compared with $1.3230 late Monday. Spot gold was at $1,199 a troy ounce, down $2.20 since Monday's New York close, with Tocom June 2011 gold at Y3,318 a gram, down Y17. Other precious metals were also lower, with spot silver at $18.24/oz, down 9 cents. Spot platinum was at $1,538/oz, down $4, while palladium was at $475/oz, down $1.
2010/08/10 15:30DJ Kotak Mahindra's UK Unit, Manulife Tie Up For Asia Fund Management
MUMBAI -The U.K. unit of India's Kotak Mahindra Bank Ltd. (500247.BY) said Tuesday it has tied up with Manulife Asset Management (Hong Kong) Ltd. to collectively pursue fund management opportunities across Asia.The move will help Manulife expand its investment management business in India, the world's second-fastest growing major economy, as its asset management division--MFC Global Investment Management--will have access to Kotak Mahindra's local expertise.The tie-up will also create cross-distribution opportunities for both companies in institutional and retail wealth management across Asia, Kotak Mahindra said in a press release.MFC Global currently manages more than $33 billion in Asia.
2010/08/10 15:00DJ Forex Options: Yen Options Up In Anticipation Of Fed Easing
TOKYO -Dollar/yen currency options edged up in Tokyo Tuesday as dealers expected the U.S. Federal Reserve to announce monetary easing measures at its policy-setting meeting later in the day to sustain the U.S. economic recovery. Benchmark one-month at-the-money volatilities stood at 11.00%/11.70% from 10.85%/11.55% Monday in New York. Volatilities may rise another 10 percentage points should such easing steps be forthcoming, an options dealer at a major Japanese bank in Tokyo said. Expectations are growing that the Fed could reinvest funds raised from maturing mortgage-bond holdings, rather than paring the size of its investment portfolio. Such steps to inject money into the financial system would diminish the value of the dollar against its major counterparts, including the yen. In Japan's options market, where many exporters need to exchange dollars into yen, hedging demand tends to rise when the dollar weakens. At 0423 GMT, the dollar stood at Y85.81 from Y85.84 in New York overnight. The dealer said some investors have built a calendar spread by selling three-month at-the-money deals, while buying one-year at-the-money contracts priced 1.4% percentage point higher than the three-month options, with face values of at least $100 million each. This strategy strengthens the holders' positions by allowing them to weather a dollar trading range as wide as Y80-Y90, he said.
2010/08/10 14:59=DJ UPDATE: Japan Noda Wants Greater BOJ Cooperation Vs Yen Rises
TOKYO -Japan's finance minister signaled Tuesday he wants the central bank to do more to curb the yen's strength as a rising domestic currency threatens to damage the nation's already slowing export-driven economic recovery. 'With regard to problems such as the strong yen or deflation, we want to cooperate with the Bank of Japan more closely than ever before,' Yoshihiko Noda said at a press conference. The finance minister's comments indicate that the government is beginning to raise pressure on the bank to further loosen its already easy monetary policy to weaken the yen versus the dollar and other key currencies. Until recently, Noda had refrained from openly demanding greater BOJ efforts, fostering the image that he might be more respectful of the bank's policy independence from politics than his predecessor Naoto Kan, who is now prime minister. Noda's slightly tougher approach toward the bank could fuel speculation that it might introduce fresh measures if the yen continues to appreciate. The dollar Friday hit Y85.02, its lowest since Y84.82 on Nov. 27 and down around 10% from where it stood in early May. It was at Y85.80 around 0530 GMT. The yen's renewed strength is fueling a sense of urgency among policymakers in Japan, whose economy depends heavily on exports for growth due to sluggish consumer spending. Rises in the yen make Japanese products more expensive abroad while they reduce the yen value of foreign currencies manufacturers earn through trade. Such yen gains are especially troubling now that Japan's exports are gradually losing steam due to weakening U.S. and European demand. Noda made it clear he doesn't want investors to push the yen higher Tuesday, saying there are 'some one-sided movements' in the currency market in a thinly veiled reference to the yen's uptrend. Noda also said any excessive fluctuations or disorderly movements in exchange rates are 'not desirable,' and he pledged to pay 'utmost attention' to the currency market. But Noda refrained from commenting on currency-market intervention or the yen's present levels. Lack of threats of action, coupled with Noda's calls for grater BOJ cooperation, could add to speculation that the government finds it hard to intervene to sell the yen, thus pinning its hopes on central bankers. Market participants generally think that the other Group of Seven nations may stop Tokyo from intervening to weaken the yen, because China could become more reluctant to let the yuan rise if it saw its neighbor use exchange rates to protect exports. The current yen-strength--partly fueled by global investors' demand for what they consider safe currencies--is also considered to be beyond Japan's control, so analysts doubt Tokyo will try to combat the trend. In addition, there are views that the U.S. government may not want Japan to boost the dollar, whose weakness is helping the U.S.'s own flagging economy. With its currency policy hands apparently tied, the government is likely to demand more from BOJ officials. The bank currently holds short-term interest rates at a rock-bottom 0.1% and is trying to pump more cash into markets through some emergency lending programs. But its policy isn't doing much to stem the yen's advance versus the dollar amid views that the Federal Reserve may further loosen its monetary policy more quickly than the BOJ to revive U.S. growth.
2010/08/10 14:36DJ German Final July CPI Reading Revised Up A Notch To 1.2%
FRANKFURT -Germany's inflation rate has been revised up a notch to 1.2% on the year in July, the federal statistics office said Tuesday. Prices in the goods and services basket rose 0.3% from June, the office added. An earlier released flash estimate saw inflation rising 0.2% on the month and 1.1% on the year due to high fruit and vegetable prices. Economists polled by Dow Jones Newswires had expected the flash estimate, which was released two weeks earlier, to be confirmed. Website: www.destatis.de
2010/08/10 14:30=DJ WORLD FOREX: Dollar/Yen Down On Japan Exporter Selling; FOMC Eyed -3-
TOKYO -The dollar and euro fell slightly against the yen in Asia Tuesday as Japanese exporters sold the currencies to settle their accounts, and dealers said the greenback's fall could deepen later in the day after the results of a Federal Reserve Open Market Committee meeting.In early Asian trading, dollar-selling by Japanese exporters and a major U.S. custodian bank triggered automated stop-loss selling orders, pushing the greenback lower, traders said.As of 0450 GMT, the dollar was at Y85.78 after falling to as low as Y85.68 in early Asian trading, compared with Y85.84 Monday in New York. The European single unit stood at Y112.78, after dropping to as low as Y112.65, compared with Y113.57 overnight.Market participants are now focused on the Fed meeting later in the day for the next major trading cue. Some dealers think the U.S central bank could announce further monetary easing measures to counter recent weakness in the country's economy, which could weigh on U.S. interest rates and push the dollar down toward the psychologically-important Y85.00 mark, said Hiroshi Maeba, a senior trader at Nomura Securities.'After weaker-than-expected U.S. jobs data last week, speculation has grown that recent fragility in the U.S. economy may worsen ahead,' said Mitsuru Sahara, a senior dealer at the Bank of Tokyo-Mitsubishi UFJ. Any new monetary easing by the Fed 'could prompt broad dollar-selling,' he said.But even if the Fed doesn't take new steps, the dollar may not rise above Y86.50 in the near-term, Sahara said. Japanese exporters are looking to sell the currency around that level ahead of the nation's summer holidays, he added.Meanwhile, the impact from the Bank of Japan's policy board meeting Tuesday was limited as players had already priced in the central bank's decision to leave its monetary policy unchanged without adding any new easing steps, traders said.The euro stood at $1.3143 as of 0450 GMT, from its New York level of $1.3225 late Monday. The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies including the euro, was at 81.122 from 80.700.
2010/08/10 14:21=DJ FED WATCH: Investors May Be Disappointed By FOMC Outcome
WASHINGTON -Market speculation that the Federal Reserve will act to boost the economy at its meeting Tuesday has grown recently, but most analysts caution the U.S. central bank is unlikely to take any major steps. U.S. stocks were higher Monday amid investors' hopes that Friday's weak jobs report could prompt the Fed to either resume buying assets, reduce an interest rate it pays banks on reserves to zero, or signal it will keep its benchmark short-term interest rate near zero for longer. However, the majority of Wall Street analysts thinks the economic outlook has not deteriorated enough to warrant more action. And given that the Fed has limited options now that short-term interest rates are already close to zero, they say the central bank probably will want to keep the little ammunition left for when they may really be needed. Fed officials are almost certain to at least discuss contingency plans for stimulating the economy at their one-day policy-setting meeting, analysts say. In the closely watched statement following the policy-making Federal Open Market Committee, which will almost surely be updated to reflect the latest doubts about the vigor of the economic recovery, they could also underline that they're ready to take action if necessary. But they're unlikely to take any concrete steps at this meeting, preferring to see how the economy develops before the Sept. 21 FOMC meeting. 'The Fed may look for market-friendly ways to adjust the language of its policy statement, but we think it is unlikely to make any structural changes to its operations at this meeting,' said money-market analysts at Wrightson ICAP LLC in a note. At their last meeting June 22-23, Fed officials downgraded their expectations for the economy, citing the financial market fallout from Europe's debt crisis. Minutes from that meeting also showed officials warning further action to support the economy might be needed if the outlook were to 'worsen appreciably.' The labor market has weakened since then, but not as much as the headline numbers suggested. The jobs report showed the economy shed jobs for the second straight month in July due to an expected drop in temporary government workers who had been hired for the 2010 census. Private-sector jobs rose for the seventh month in a row, though at a slower pace than earlier in the year. And financial markets have recovered somewhat, with the Standard & Poor's 500 stocks index up around 3% since the June meeting. Taking additional stimulus measures could make the Fed lose credibility because it would signal a loss in confidence in its most recent forecasts, warn analysts at Barclays Capital. Although data have been softer recently, 'it wasn't weak enough to warrant such an abrupt change in the Fed's view,' they say. Michael Feroli, economist at J.P. Morgan, believes the most the FOMC could do would be to tweak the policy guidance paragraph in its statement to express an increased willingness to take action if necessary. The phrase that the Fed 'will employ its policy tools as necessary to promote economic recovery and price stability' could be beefed up to give a stronger message like: 'is prepared to take further policy actions as needed.' The Fed could resume purchases of Treasury debt or mortgage-backed bonds, likely by using proceeds from existing holdings of such debt as they mature--at least to start with. It could stop paying interest on the excess reserves that banks hold at the Fed to encourage banks to lend more. The central bank pays 0.25% on excess reserves. Or it could try making a more explicit pledge to keep its benchmark short-term rate near zero for longer than the 'extended period' phrase it has been using since March 2009. But most analysts believe the Fed will only talk about these options at Tuesday's meeting--leaving any action for if and when the economic outlook gets really bad. Dan Greenhaus, analyst with Miller Tabak & Company, believes the Fed will adopt a 'wait and see' attitude, assessing incoming economic data and any further developments in the fiscal outlook before the Sept. 21 meeting. After all, it was only a week ago that Fed Chairman Ben Bernanke sounded a rather optimistic note about the economy's outlook. The Fed chief said he expects the recovery to continue, and indicated it may gather steam over time as consumer spending growth is likely to pick up in coming quarters, helped by gains in income and better access to credit. And it was less than three week ago that Bernanke said during his semi-annual report to Congress that the Fed is 'not prepared to take any specific steps in the near term particularly since we're still also evaluating the recovery and the strength of the recovery.' There's one significant outlier. Economists at Goldman Sachs think the Fed will take a 'baby step' to help the economy at their meeting Tuesday. Cautioning it's a 'fairly close call,' they expect the Fed to announce they'll reinvest the proceeds of maturing mortgage-backed securities into bonds.
2010/08/10 11:36=DJ FED WATCH:San Francisco Fed Paper Warns Odds Of Recession Rising
NEW YORK -The risk the U.S. economy could fall back into recession is on the rise. A new report from the Federal Reserve Bank of San Francisco warns the economic outlook 'is likely to deteriorate progressively starting sometime next summer.' Over the shorter run, the paper, written by Travis Berge and Oscar Jorda, argues the odds of falling into recession are relatively low. But over the next two years it appears the odds are only slightly better than even that an already-tepid recovery will continue. The paper, published Monday, arrives just ahead of a potentially drama-filled Federal Reserve monetary-policy meeting. For many months now, market participants have gone into these gatherings fairly confident of the outcome, expecting policy makers to stick to their zero percent interest rate stance amid pledges to keep interest rates low for an 'extended period.' But Tuesday's Fed meeting has become fraught with uncertainty as the U.S.'s already-modest recovery looks to be running out of steam. While Fed chief Ben Bernanke has allowed there are additional steps the central bank could take to promote growth, he has appeared to be reluctant to employ them, adopting a patient stance in regards to the economy's emergence from recession. Friday's release of weak July jobs data, along with press reports, has helped reignite a market debate over whether the Fed will take fresh steps to help the economy, even though many economists disagree that anything exciting will happen. Economists' caution is in part motivated by the fact the Fed has no good options left to it, should it want to again stimulate growth. Interest rates can be cut no further. The Fed could again buy mortgage debt, but borrowing rates are already at historic lows. The central bank could buy significant amounts of government bonds, but it would risk its inflation fighting credibility by appearing to monetizing the debt. The Fed could in theory drive back into the economy the $1 trillion in bank reserves now on its balance sheet by suspending the interest it pays banks for that cash. But that, too, is problematic and there's no guarantee banks would even want to loan that money out. Policy makers face considerable uncertainty in the outlook. The paper states 'at two years out, the odds of recession vary from almost three times more likely than expansion, to expansion being almost five times more likely than recession.' The findings are based on data released as part of the Conference Board's monthly leading economic indicators report. That series takes an array of existing numbers and seeks to divine the economy's future trajectory. The June LEI was down, leading the private research outfit to warn of slower growth through the fall. The San Francisco Fed paper said that even with the darkening outlook, there's time to change course. 'Economic policy can strongly influence the outcome,' the researchers said. While they did not offer any suggestions, they added, 'the policies that are adopted today could play a decisive role in shaping the pace of growth.' Berge is a graduate student at the University of California, Davis, and Jorda is a professor at the university and a visiting scholar at the San Francisco Fed.
2010/08/10 11:36*DJ BOJ Board Votes Unanimously To Keep Rates Unchanged
2010/08/10 11:35*DJ BOJ: See Downside Risks In International Financial Markets
2010/08/10 11:34*DJ BOJ: To Keep Making Efforts To Combat Deflation
2010/08/10 11:33*DJ BOJ: See Upside Risks In Faster Growth In Emerging Economies
2010/08/10 11:33*DJ BOJ:Economy Likely To Be On Recovery Trend
2010/08/10 11:32*DJ BOJ: To Watch Impact Of Financial Market Instability On Japan, Global Econ
2010/08/10 11:32*DJ BOJ: To Maintain Extremely Easy Monetary Conditions
2010/08/10 11:32*DJ BOJ: Pace Of On-Year CPI Falls Likely To Slow
2010/08/10 11:28*DJ BOJ Leaves Overnight Call Rate Unch At 0.1%
2010/08/10 11:24=DJ FOREX VIEW: Anti-Dollar Bets Pick Up Speed, Could Signal Broader Trend
NEW YORK -Investors are ramping up their bets against the dollar--last week at a pace not seen in two years--as the U.S. currency loses its appeal as a safe harbor.The anti-dollar bets, called shorts, signal the greenback's competitors, including the euro, the commodity-backed Canadian and Australian dollars and many emerging-market currencies, could pop higher in the near term, with the euro targeting $1.35."No, the U.S. economy isn't bouncing back vigorously, but, yes, it seems we are beyond the worst moments of the crisis," said Jonathan E. Lewis, founding principal of Samson Capital Advisors, which has $6.5 billion under management. Lewis said his firm's former anti-euro strategies have moved to neutral, with a look toward an positive euro strategy in the longer-term.Even with the U.S. economy slowing, global stock and corporate bond markets are stable, Lewis said, decreasing the appeal of the dollar as a safe harbor in stormy times.As long as the global economy keeps inching toward recovery, investors are likely to continue to ditch the dollar for higher-yielding currencies, he said.A UBS analysis of the weekly Commitments of Traders report issued by the Commodity Futures Trading Commission showed investors "abandoning the dollar at an accelerating pace.""We have not seen such a pronounced single-week positional shift away from the [dollar] since July 2008, a time when consensus opinion felt the worst of the crisis had passed," UBS said of the data for the week ended Aug. 3.Positioning in the Australian and Canadian dollars has moved even more strongly to the positive side, according to the UBS analysis of the data, while the U.K. pound also has been viewed in dramatically better light, with investors cutting their net bets against the pound by nearly 90%.With investor views dimming on the dollar, sentiment has improved on the euro, which had bets against it cut by 66% in the same data period. In early May, with fears of euro-zone sovereign debt roiling markets, net anti-euro bets reached a record high 113,890 contracts; in the week ended Aug. 3, only 7,300 contracts remained net short the euro, according to a Scotia Capital analysis of the CFTC data.The euro has benefited from European officials' handling of the sovereign-debt crisis, said Eric Fine, a fund manager at Van Eck G-175 Strategies, a part of VanEckGlobal, a firm with $22.2 billion in assets under management.Along with loose monetary policy, the euro zone also has implemented belt-tightening austerity plans, matching fiscal measures with monetary stimulus, he said.In the U.S., on the other hand, Fine said, monetary policy also is ultra-loose, but fiscal policies, such as Europe's austerity plans, have not been similarly implemented to deal with the U.S. deficit. This disparity weighs on the dollar, Fine said.Investors have to put low-yielding dollars to work somewhere, Fine said, and if "monetary authorities are viewed as pushing on a string," by implementing even more measures to kickstart a sagging economy, as recent speculation has suggested the Federal Reserve could move toward, the dollar is likely to come under even more pressure, Fine said.Those dollars could go to the euro or into emerging-market currencies, Fine said, and the speculative positioning data could be the first clues of the tide turning more strongly against the dollar over a longer term, he said.To be sure, the CFTC data represent only a small slice of the foreign-exchange market and reflect positions taken by the most active speculative investors. The data do, however, give a sense of market sentiment toward the euro based on the direction and volume of bets.
2010/08/10 11:01DJ Japan Finance Minister: Want More Cooperation With BOJ Vs Yen Rise, Deflation
TOKYO -Japan's finance minister said Tuesday the government wants to cooperate 'more closely than ever before' with the Bank of Japan to tackle the rising yen and falling prices. 'With regard to problems such as the strong yen or deflation, we want to cooperate with the BOJ more closely than ever before,' Yoshihiko Noda said at a press conference.
2010/08/10 10:11DJ Japan Keeps Economic View In August, But Cuts Production Assessment
TOKYO -The Japanese government kept its view on the country's economy unchanged in August, but downgraded its assessment of industrial production for the first time in 19 months amid growing uncertainty over the strength of the global economy. 'The economy has been picking up steadily and the foundation for a self-sustaining recovery is being laid,' the Cabinet Office's monthly economic report released Tuesday showed, using the same wording as in July. However, the report offered a less upbeat view on output, saying it is picking up 'moderately.' The July report said that production was 'picking up', without any qualification. The downward revision comes as fears grow that the global economic recovery could be losing momentum. Japan's economic growth is underpinned by exports, especically to emerging economies such as China, and any slowdown in external demand could make companies reluctant to boost production, raising the risk that the economy will stall. The nation's industrial output fell 1.5% from a month earlier in June, the first decline in four months as auto and electronics makers cut output on anxiety that overseas demand could fade soon. If China's economy grows at a slower tempo, 'that could directly affect Japanese production activity down the road,' said Keisuke Tsumura, Cabinet Office parliamentary secretary in charge of economic and fiscal policy. The Japanese government this month cut its view on the Chinese economy for the first time in 18 months, saying 'the pace of economic expansion has been moderating recently.' Another concern for the Japanese economy is the stronger yen, Tsumura said, though the government didn't mention it in the monthly economic report. On Friday, the U.S. dollar briefly plunged to an eight-month low of Y85.02 versus the Japanese currency, following weaker-than-expected U.S. jobs data released last week. 'We have reiterated that we are watching the impact of the yen's appreciation on Japan's manufacturers and economy,' he said. 'We haven't changed our stance that we are very carefully monitoring international financial market developments.' In August, the government gave the same grades to key parts of the economy. Corporate profits are 'improving' and business investment is 'leveling off,' while exports are 'increasing moderately.' Consumer spending is 'picking up.' Job markets remain 'severe,' but are showing signs of 'incipient recovery.' Yet, the whole economy remains 'in a mild deflationary phase.' Tsumura said that domestic demand is expected to continue picking up, so the administration, led by Prime Minister Naoto Kan, is not in a position where it needs to consider implementing additional economic-stimulus measures soon.
2010/08/10 09:52=DJ FOCUS: Pound Sensitive To Any BOE Inflation Report Surprises
LONDON -Sterling is looking particularly sensitive right now, with this week's crucial Bank of England quarterly Inflation Report holding the potential to push it hard in either direction.The report, due Wednesday, is always a key event for the pound, because it sets out the BOE's views on the country's likely inflation path--a solid clue for future interest rates, which in turn play a big role in determining the exchange rate.This time around, though, it comes at a rare point when traders are neither overly positive nor overly negative on the pound. That gives the Inflation Report added weight in setting the currency's direction over the next few weeks making it 'the fundamental focus for sterling,' in the words of Daragh Maher, deputy head of global foreign-exchange strategy at Credit Agricole CIB in London.Few market-watchers have a strong sense of what the report is likely to contain. 'Stronger-than-expected growth and inflation during the second quarter of 2010 could provide the grounds for a hawkish report, but the tone of recent BOE testimony suggests that the report will actually be quite dovish,' Maher said.The pound has had a rough ride so far this year, falling heavily towards the time of the May general election and remaining under pressure as the vote's outcome was uncertain.Since then, however, many concerns over the U.K. economy have eased, and concerns over the U.S. economy have taken hold of the currency markets as a whole. Sterling has climbed by some 10% against the dollar since June, coming close to $1.60 against the dollar for the first time in six months. Against other key currencies, sterling's rally has been more modest, but it has still risen by more than 2% against a basket of currencies from the U.K.'s biggest trade partners since June.Now, data released by the Commodity Futures Trading Commission show that traders are roughly equally balanced between those with negative and positive bets for the first time since December last year.The biggest danger to sterling would probably come if the BOE explicitly retains the option for further quantitative easing--buying U.K. government bonds with freshly created central bank money. Downgrades to the BOE's growth forecasts in the light of the U.K. government's plans for fiscal consolidation could also bite.These sorts of fears make a setback in the currency seem likely, even for those who have a positive long-term view on its prospects.'We judge that the Inflation Report could cause the currency to pull back slightly before advancing further,' said Michael Sneyd, a foreign exchange economist at Barclays Wealth in London.Only one thing could potentially overshadow the report in terms of sterling's prospects: the dollar.The market as a whole is being driven by a widespread decline in the U.S. currency--a trend that has accelerated since Friday's wobbly labor-market report. Tuesday's Federal Reserve meeting could hit the dollar hard, and send sterling soaring whatever the Inflation Report contains.'The market's psyche is very negative on the dollar at the moment,' said Steven Barrow, a senior currency strategist at Standard Bank in London.At 1350 GMT, sterling was trading at $1.5958 versus the dollar, from $1.5968 late Friday in New York, according to trading system EBS. Meanwhile, the euro traded at GBP0.8308 against the pound, from GBP0.8330.
2010/08/10 07:24=DJ DATA SNAP: UK Retail Sales Slow On Budget Fears
LONDON -U.K. retail sales growth slowed in July as consumers became concerned about the impact of government measures to cut its huge budget deficit.The British Retail Consortium Tuesday said its monthly survey showed sales in stores that have been open for at least a year were 0.5% higher than in July 2009, having risen by 1.23% in June when compared with the same month a year earlier.Sales in all stores were up 2.6% from a year earlier, having been up 3.4% in June.Recent surveys of consumers have shown that confidence has ebbed in the wake of the May 6 general election and June 22 emergency budget.The coalition government has announced big spending cuts across most departments--which are expected to lead to widespread job losses--and outlined plans to freeze the earnings of public-sector staff who earn more than GBP21,000 a year.'Talk of public spending cuts is unsettling customers and they are concentrating on essentials,' said Stephen Robertson, director general of the British Retail Consortium. 'It's clear the recovery continues to need support. The Bank of England must resist pressure to increase interest rates too soon.'In stores that have been open for 12 months, food sales rose by 1.6% in July, while non-food sales were up by just 0.3%.The BRC survey covered the four weeks from July 4 to July 31.BRC Web site: www.brc.org.uk
2010/08/10 07:18=DJ DATA SNAP: UK House Prices Slip In July, First Fall In A Year
LONDON -U.K. house prices fell for the first time in a year in July as the number of new properties for sale outpaced demand again, the Royal Institution of Chartered Surveyors said Tuesday. The outlook for the next three months suggests prices will remain soft, although actual sales are expected to rise as lower prices encourage activity. The RICS survey showed that in seasonally-adjusted terms, the proportion of surveyors reporting a fall in house prices exceeded the proportion reporting a rise, resulting in balance of -8 percentage points in July. That is the first negative balance since July 2009 and compares with a revised balance of +8 in June which had been previously estimated at +9. The July outcome was sharply weaker than expected as economists surveyed by Dow Jones Newswires last week had expected the balance to slow to +5. The survey also reported that while the number of new properties available for sale has risen again in July, and at a faster pace than in June, the number of transactions held steady for a third consecutive month. 'The fall in the RICS house price measure is broadly consistent with most other recent data that has been released,' said RICS spokesperson, Jeremy Leaf. 'This is a reflection of both the increase in supply following the scrapping of Home Information Packs and the more cautious stance from buyers,' he said, adding that while surveyors are predicting the softer pricing trend will continue, 'agents are still generally optimistic about sales activity which should benefit from more realistic pricing of properties.' The survey is broadly in line with other measures of house prices showing a slowdown in price growth and also activity. However, the more forward looking aspects of the survey clearly suggest that the surprise house price recovery which began in the second half of 2009 is now running out of steam, not least due to fears over job security. The government's emergency June budget unveiled various spending cuts and tax rises which included up to 25% spending cuts per department over the next five years, which is expected to lead to the loss of around 600,000 public sector jobs. So, while sellers have been encouraged by the removal of the cost of HIPS--where potential sellers must purchase a report of their property before putting it up for sale--potential buyers are now in a more cautious mood. Surveyors now expect prices to fall over the next three months, the second consecutive month this balance has been in negative territory since late 2009. However, agents predict sales activity will be buoyed by lower prices with a balance of +8 surveyors saying they expect sales to rise over the next three months. By region, the RICS survey reported that prices fell in seven of the ten regions, with the largest decline in the East Midlands, closely followed by the West Midlands. Prices rose in North West England, London and South West England.
2010/08/10 07:06*DJ UK BRC Jul Total Retail Sales +2.6% On Year
2010/08/10 07:01*DJ UK BRC Jul Same-Store Retail Sales +0.5% On Year
2010/08/10 07:01*DJ UK RICS House Price Balance -8 In Jul Vs +8 In Jun
2010/08/10 07:01*DJ UK RICS House Price Balance Was Forecast At +5 In Jul
2010/08/10 03:33DJ PRECIOUS METALS: Comex Gold Pulls Back Slightly Ahead Of Fed
NEW YORK -Gold futures ended a generally steady session a bit on the downside Monday ahead of the Federal Reserve's interest rate and policy announcement.The most actively traded gold contract, for December delivery, fell $2.70, or 0.2%, to settle at $1,202.60 an ounce on the Comex division of the New York Mercantile Exchange.Participants have been buying gold in anticipation of possible further quantitative easing from the Federal Open Market Committee, which would likely be bullish for gold by pressuring the U.S. dollar, keeping interest rates low and adding to liquidity that could be used for gold purchases. The slight price declines in gold Monday came as investors were evening up some of those positions.'It's marking time before the FOMC,' said Jim Steel, senior vice president and metals analyst with HSBC in New York.The closely watched interest rate announcement and accompanying language on the economy is scheduled for release at 2:15 p.m. EDT Tuesday.Some think the Fed may offer further accommodative monetary policy after weaker-than-expected U.S. nonfarm payrolls data Friday and reports last week that the central bank could consider changing the way it manages its massive portfolio, effectively preventing a tightening in policy. Interest rates are expected to remain low.While inflation is also expected to remain subdued, ostensibly bearish for gold as an inflation hedge, ultra-low interest rates have been supporting the metal. They reduce the opportunity costs of holding gold, which pays no interest itself.Any additional policy easing could also weaken the U.S. dollar, benefiting dollar-denominated gold by making it less expensive for buyers using other currencies.'We expect them to take a very dovish stance on policy,' said Standard Bank analyst Walter de Wet. 'On top of low inflation, last Friday's U.S. nonfarm payroll numbers confirmed sluggish job growth in the U.S.'Gold gained on Friday, as investors wanted a perceived safer place to put their money after market sentiment swooned on news that the U.S. economy lost 131,000 jobs in July, versus economists' expectations for a drop of just 60,000.Other precious metals trading in New York, which are used more widely for industrial purposes than gold, lost more than the yellow metal in percentage terms as the dreary data from Friday continued to weigh.Comex September silver fell 23 cents, or 1.2%, to $18.242 an ounce. Nymex October platinum dropped $27.90, or 1.8%, to $1,542.90 an ounce while September palladium on the exchange lost $7.95, or 1.6%, to $479.65. Settlements (ranges include open-outcry and electronic trading): London PM Gold Fix: $1,203.00; previous PM $1,207.75 Spot gold at 1:32 p.m. EDT: $1,199.65, down $5.65; Range: $1,199.25-$1,209.85 Dec gold $1,202.60, down $2.70; Range $1,201.10-$1,212.10 Sep silver $18.242, down 23 cents; Range $18.220-$18.575 Oct platinum $1,542.90, down $27.90; Range $1,541.10-$1,578.70 Sep palladium $479.65, down $7.95; Range $476.10-$493.75
