2010/08/18 21:20=DJ WORLD FOREX: U.K. Pound Gains Vs. Dollar After BOE Minutes
NEW YORK -The U.K. pound gained against the dollar Wednesday after minutes from the Bank of England's rate-setting committee painted a more positive picture than had been expected. As the effects of the U.K.'s belt-tightening budget weigh on expectations of future growth, some analysts had expected the BOE's Monetary Policy Committee in its August minutes released Wednesday to have discussed an expansion of so-called quantitative easing, the government bond-buying program intended to stimulate a sagging economy. The minutes showed the committee considered arguments for easing and for tightening policy at its August meeting, but eight of its members ultimately decided to leave policy on hold, with one dissenter who wanted to increase key rates. 'There was speculation that maybe the discussion regarding QE would have been more emphasized,' with members perhaps even voting to increase the bond-buying program, said Ian Stannard, currency strategist at BNP Paribas in London. The fact that the BOE left the bond-buying program unchanged provided support for sterling, Stannard said. The continuing dissent of MPC member Andrew Sentance to increase key rates also lent the pound support, though Stannard said inflation expectations that are likely to diminish, along with slowing growth, are likely to push the pound lower in the medium term. Wednesday morning, the U.K. pound had gained more than 0.5%, at $1.5680 from $1.5572. The euro was at $1.2912 from $1.2879 late Tuesday, according to EBS via CQG. The dollar was at Y85.25 from Y85.50, while the euro was at Y110.05 from Y110.12. The dollar was at CHF1.0400 from CHF1.0440. The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 81.961 from 82.236. The Canadian dollar rose strongly, bolstered by continued positive fallout from news that Australian firm BHP Billiton Ltd. is making a bid for Potash Corp. of Saskatchewan Inc. Billiton initially made a C$38.56 billion offer on Tuesday that was rejected by Potash Corp.'s board. It announced earlier Wednesday that it will make its bid directly to the target's shareholders. The U.S. dollar was at C$1.0275 from C$1.0333 late Tuesday. It touched a session low of C$1.0273 in earlier trading, its lowest level since Aug. 9, according to EBS via CQG, before rebounding modestly. 'With talk that BHP is launching a hostile takeover attempt for Potash Corp, [the Canadian dollar] has continued to perform well, despite the weakness in equities and oil prices this morning,' said TD Securities. 'Estimates of how much [Canadian dollars] will have to be purchased in the deal are in the neighborhood of just below C$10 billion,' TD said. The euro mustered a modest gain against the dollar, tracing above $1.29, with strong government-debt auctions in Portugal and Germany undergirding the common currency. If the euro does not sustain gains above $1.29, a BNP Paribas technical analysis calls for it to fall, with a break below $1.2735 signaling a new downtrend in the common currency. 'Indeed, within Europe despite the more positive news coming from the recent sovereign bond auctions and bill issues, there remain concerns regarding the banking sector in some regions,' BNP Paribas analysts said. The yen also continued to make gains against the dollar. While Japan's central bankers don't think the yen's rise poses an immediate threat to the economy, they are ready to consider additional monetary steps if the currency surges higher or if politicians apply more pressure for action.
2010/08/18 20:52DJ BOE's MPC Mulled Case For Easing And Tightening Policy
2010/08/18 20:12DJ Fed Call: No Fed Liquidity Operation Due; Fed Funds At 0.2050%
NEW YORK -The Federal Reserve has no liquidity operations scheduled for Wednesday. Fed funds were last quoted at 0.2050%, compared to the federal-fund target range of 0 to 0.25%, according to Tullett Prebon data.
2010/08/18 19:01*DJ US MBA Refinance Index +17.1% At 4,676.7; Last Week 3,993.0
2010/08/18 19:01*DJ US MBA Purchase Index -3.4% At 169.4; Last Week 175.4
2010/08/18 19:00*DJ US MBA Market Index +13.0% At 829.7; Last Week 734.3
2010/08/18 18:33*DJ 3-Month Sterling Libor Falls To 0.727% Vs 0.72850% Tuesday
2010/08/18 18:32*DJ 3-Month USD Libor Falls To 0.34547% Vs 0.35219% Tuesday
2010/08/18 17:59DJ DPJ Lawmaker Says Japan PM Willing To Adopt New Measures Vs Yen -Kyodo
TOKYO -Prime Minister Naoto Kan expressed willingness Wednesday to work out additional pump-priming measures to address the yen's steep appreciation, Kyodo News reported Wednesday, citing a ruling party lawmaker who held talks with the premier. Kan is well aware of the need for supporting small and midsize companies hit hard by the stronger yen, Keishu Tanaka, a House of Representative member from the Democratic Party of Japan said. 'We told (Kan) that the government should use a reserve fund in the fiscal 2010 budget' to finance the measures as it would take time to compile a supplementary budget for the current fiscal year, Tanaka said. The government is studying new measures to address the slowing economy and stronger yen based on Kan's instruction on Monday, according to government sources. The measures are expected to include stimulating personal consumption of eco-friendly products, helping new graduates find jobs and revitalizing small and midsize companies.
2010/08/18 17:49DJ BOE's MPC Mulled Case For Easing And Tightening Policy
LONDON -The Bank of England's Monetary Policy Committee considered arguments for easing and for tightening policy at its August meeting, but eight of its members ultimately decided to leave policy on hold. Andrew Sentance was for the third month running the lone dissenter arguing for a rise in the Bank rate to 0.75% from 0.5%. However, the minutes of the meeting published Wednesday showed that most of the MPC members saw 'substantial' risks to inflation and 'stood ready to respond in either direction as the balance of risks evolved.' Among the factors that suggested policy might need to be eased, the MPC considered the continued tightness in credit conditions, the impact of the emergency budget and some weakness in recent business and consumer surveys. There were also some developments that suggested a tightening of policy might be appropriate including a pickup in economic growth, the continued high level of inflation, and the risk that inflation expectations may rise. However, most MPC members continued to believe that spare capacity would bring inflation back down to target and that policy should be left unchanged. The BOE's key interest rate stands at a record low of 0.5%, while its stock of bond purchases has been at GBP200 billion since February.
2010/08/18 16:58*DJ 10-Yr JGB Yield Falls To 0.900%; Lowest Since Aug 2003
2010/08/18 16:35*DJ Sterling Spikes Above $1.56 After BOE MPC Minutes
2010/08/18 16:34*DJ Gilts Stable As BOE Minutes Along Expected Lines
2010/08/18 16:32*DJ BOE: Pickup in Growth, High Inflation Suggested Tightening Needed
2010/08/18 16:30*DJ BOE Aug Minutes: MPC Voted 8-1 For BOE Rate Action
2010/08/18 15:49DJ Tokyo Shares End Higher As Resource Shares Rise, Yen Slips-2-
TOKYO -Tokyo stocks rose Wednesday as modest yen weakening and a surge in resource-related shares such as Inpex and JX Holdings helped push the broader indexes to break a two-day losing streak.The Nikkei 225 Stock Average rose 78.86 points, or 0.9%, to 9240.54. It was only the second gain for the index in the last nine sessions.The Topix index of all the Tokyo Stock Exchange First Section issues also rose 8.45 points, or 1.0%, to 835.23, with 31 of 33 subindexes closing in positive territory.Trading volume totaled 1.59 billion shares, noticeably higher than earlier this week.Stocks rose from the outset, helped by gains in overnight U.S. shares and a slightly weaker yen, which aided exporters. The dollar is still viewed by many as precariously weak, however, as it remains mired below Y86."It's not like short positions mounted as investors had sold cash stocks," said Hideyuki Okoshi, manager at Chuo Securities, adding that today's buying was careful, as opposed to reflexive or aggressive in tone."Investors are staying on the sidelines on a lack of trading cues until next week," said Tsuyoshi Kawata, senior strategist at Nikko Cordial Securities, citing media reports saying Prime Minister Naoto Kan and BOJ Gov. Masaaki Shirakawa will meet sometime next week to talk about yen's recent rise.Trading houses and natural resource shares outperformed the market, following the overnight rise in U.S. materials stocks on BHP Billiton's $38.6 billion bid for Potash Corp. Mitsui & Co added 2.0% to Y1,188, while Itochu Corp. added 1.8% to Y684.U.S. crude futures' snapping of a five-day losing streak on Tuesday also provided respite, helping energy developer Inpex to rise 4.6% to Y396,000 and JX Holdings to surge 4.0% to Y470.Exporters generally rose, with Nikon adding 1.5% to Y1,511, Honda Motor up 2.4% to Y2,827, and Sony up 0.7% to Y2,569. Optical semiconductor elements maker Hamamatsu Photonics closed up 6.4% to Y2,606 after the announcement of its addition to the MSCI World Index, a move expected to generate some 2.5 million shares worth of buying by Topix passive funds by August 31, according to one trader.Elsewhere, Ain Pharmaciez closed down over 10% to Y2,753 after announcing a Y5.7 billion capital raising plan via methods including a possible public offering of new shares and a third party allocation to Seven & i Holdings.Precision motor maker Nidec also added 3.4% at Y7,390 after announcing it will acquire the motors and controls unit of U.S. firm Emerson Electric."This will sharply boost Nidec's presence within the market for home appliance motors," said Toru Kitani, analyst at SMBC Friend Research Center, noting that the deal is favorably viewed by investors since Nidec is using cash on hand, the Emerson unit is profitable, and the M&A environment is favorable, thanks to the firmer yen.Sumitomo Trust & Banking added 3.3% to Y468, while Chuo Mitsui Trust Holdings added 2.0% to Y313 on a Nikkei report that the pair are likely to set their merger share exchange ratio at 1.5:1.0. The two banks announced last November that their merger will be effective April 2011.September Nikkei 225 futures closed up 70 points, or 0.8%, at 9240 on the Osaka Securities Exchange.
2010/08/18 15:08DJ Forex Options: Dollar/Yen Options Down As Spot In Tight Range
TOKYO -Dollar/yen currency options dropped in Asia Wednesday, as the underlying exchange rate hugged a tight range, decreasing demand for protection against sharp fluctuations in the U.S. unit.The greenback was narrowly confined between Y85.34-Y85.69 in the morning session with the upside capped by Japanese exporters' orders. The downside, meanwhile, was supported by short-term-focused investors as the Japanese authorities have recently stepped up warnings against a strong yen, suggesting they may take action to curb further sharp rises.The dollar stood at Y85.37 as of 0326 GMT. Benchmark one-month at-the-money volatilities dropped to 10.55%/11.25% from 10.90%/11.60% in New York Tuesday.Volatilities may slide another 20 pips by Friday, as many investors were interested in selling hedging contracts, overwhelming those who want to buy deals.'Offers are overwhelming bids this so far this week,' a senior at a major brokerage in Japan said.He added that some sold six-month at-the-money straddles with $100 million face values at 12.2%. The same investors bought 18-month straddles with $70 million face values at 13.25%.
2010/08/18 15:06DJ JGBs Up A Tad On BOJ Easing View, Kan-Shirakawa Meeting Awaited
TOKYO -Medium- and long-term Japanese government bonds finished mildly higher Wednesday, supported by the view that the Bank of Japan may take additional steps to cap the yen's recent strength. While JGBs were sold in the morning on profit-taking and weakness in U.S. Treasurys overnight, deep-rooted expectations for monetary loosening in Japan soon reversed the trend. 'JGBs have been supported by speculation of additional easing by the BOJ ahead of a meeting between Prime Minister (Naoto Kan) and BOJ Gov. (Masaaki Shirakawa reported to take place) early next week,' said Makoto Yamashita, a strategist at Deutsche Securities. Local media reported Kan and Shirakawa may meet as soon as next Monday to exchange views on impact of the yen's recent movements and ways to deal with the issue. Because Japan's central bank preempted a similar meeting between Shirakawa and the then-prime minister in December by announcing a three-month emergency loan program, market expectations for action by the BOJ will likely heighten even more if yen rises and falls in stock prices advance further towards the weekend, Yamashita added. Reflecting the easing talk, the two-year cash JGB yield, which is sensitive to monetary policy changes, fell to a fresh five-year low at 0.115%. Meanwhile, the benchmark 10-year cash JGB yield was down 1.0 basis point at 0.925%, as of 0600 GMT. 'The JGB market is expected to maintain a solid bias in the near term, as there are still a lot of investors who feel the urgent need to purchase JGBs ahead of bond maturities in September,' said a trader at a Japanese bank. The trader expects the 10-year JGB yield to sink gradually towards 0.8% by the beginning of the autumn due to the lack of clear selling cues. Only possibility which could reverse recent JGBs' strength would be revival of oversupply concerns when the government begins genuine discussions about further economic stimulus or budgets for the fiscal year starting next April, the trader added.
2010/08/18 14:26*DJ 10-Year JGB Yield Falls To Fresh 7-Year Low At 0.915%
2010/08/18 14:03=DJ WORLD FOREX: Dollar, Euro Down Vs Yen On Profit Taking
TOKYO -The dollar and euro fell against the yen in Asia Wednesday as Japanese life insurance firms and major U.S. banks sold the currencies to lock in profits after their overnight rises.Dealers said the greenback and common currency could fall further against the safe-haven yen later in the day. Despite a recovery in share markets overnight in the U.S., investors are wary equities could soon slump again due to lingering uncertainty over the global economy.Due to such caution, investors will likely continue to favor the yen, dealers said. The cool reaction of market participants in Asia Wednesday to better-than-expected U.S. industrial production data released overnight highlighted how that caution may continue to hurt the dollar against its Japanese counterpart."There still is a strong sense that the dollar will weaken in the future," said Yuzo Sakai, manager of foreign exchange business promotion at brokerage Tokyo Forex & Ueda Harlow.The U.S. unit could drop to 85.10 later in the global day, Sakai said.The yen's recent strength has fueled speculation that the Japanese government could pressure the Bank of Japan to take more monetary easing measures to prevent further rises in the currency. Local media have reported that Japanese Prime Minister Naoto Kan will meet with Bank of Japan Gov. Masaaki Shirakawa Monday. While Japan's central bankers don't think the yen's rise poses an immediate threat to the economy, they are ready to consider additional monetary steps if the currency surges higher or if politicians apply more pressure for action, people familiar with the situation told Dow Jones Newswires.At 0450 GMT, the dollar stood at Y85.42, down from Y85.50 late Tuesday in New York.The euro was also lower, at Y109.78 at 0450 GMT from Y110.12 late Tuesday in New York.The drop came in part as a worse-than-expected German business sentiment survey overnight prompted market participants to sell the common currency, dealers said. Expectations for Germany's economy worsened in August, according to a survey published by the ZEW economic research institute, raising concerns that the driver of Europe's growth could falter ahead.The common currency also fell against the dollar, in part as major U.S. banks sold the risk-sensitive unit as Asian share markets were mixed, disappointing expectations for solid gains after U.S. share prices rose overnight.The euro traded hands at $1.2851 at 0450 GMT, down from $1.2879 late Tuesday in New York. The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 82.343 compared with 82.236.The disappointing performance of regional equities also prompted short-term investors to sell the risk-sensitive British pound against the yen. The British currency fell to Y132.63, its lowest level against its Japanese counterpart in nearly four weeks.
2010/08/18 09:21*DJ Dollar/Yuan Central Parity 6.7895 Vs Tuesday OTC Close 6.7921
2010/08/18 09:19*DJ Dollar/Yuan Central Parity 6.7895 Vs Tuesday Parity 6.7979
2010/08/18 09:05*DJ Sterling Hits Y132.76; Lowest Since July 23
2010/08/18 07:34DJ Fed Plosser: US In 'Modest Recovery' -Fox Business
Philadelphia Federal Reserve President Charles Plosser on Tuesday said he doesn't expect a so-called double-dip recession and that the U.S. is in a 'modest' economic recovery. 'I believe we're in the midst of a moderate recovery, a modest recovery. I think we've got some real challenges ahead of us,' Plosser, who's currently not a voting member of the Fed's policy-making Federal Open Market Committee, told Fox Business Network's Neil Cavuto. 'It's modest because the problems we have in this recovery are not, in my view, any more susceptible right now to more lower interest rates.' He said the recovery will be a long, 'painful process' as resources move out of the housing and financial sectors to other parts of the economy. Website: www.foxbusiness.com
2010/08/18 00:12DJ UK Osborne: Will Not 'Budge' From Deficit Reduction Plan
LONDON -The U.K. coalition government will not budge from its ambitious fiscal consolidation plan, Chancellor of the Exchequer George Osborne said Tuesday, warning that to do so risks igniting market anxieties.Speaking at Bloomberg L.P. in London, Osborne said 'the actions we took in the budget have removed the biggest downside risk to the recovery.''Britain now has a credible plan to deal with our record deficit,' he said. 'To budge that plan now would risk reigniting the market's suspicion.'Osborne said he was 'cautiously optimistic' about the economy and said the rebalancing toward the export sector has already begun.However, Osborn said he agreed with Bank of England Governor Mervyn King that after the deep and protracted recession, the U.K. would inevitably face a 'choppy' recovery.
