2010/09/03 17:44DJ JGBs Fall Amid Mounting Political Concerns
TOKYO -Japanese government bond prices fell Friday as a poorly bid liquidity auction and mounting political concerns prompted banks, insurance companies and other players to sell JGBs. That sent the yields on the 10-, 20- and 30-year bonds to their highest levels in nearly two months, marking a sharp turnaround from the seven-year lows marked just last week. Auctions next week, particularly a five-year tender Friday, could keep upward pressure on yields in the near-term if they reveal further weakness in demand, dealers said. As super-long-end bonds have been sold off in recent sessions, five-year notes have held up comparatively better. But 'if we see weakness in the five-year sector the overall market would extend its declines' in coming weeks, said Kenro Kawano, strategist at Credit Suisse. In Tokyo Friday, investors sold JGBs in the afternoon session after weak results from the Ministry of Finance's liquidity-enhancing auction added to concerns the market could be in for a longer correction as concerns over political instability grow. The benchmark 10-year yield briefly rose to 1.150% in afternoon trade, its highest level since July 12, and up from the seven-year low it marked last Wednesday at 0.895%. The 20-year and 30-year yields also hit near two-month highs at 1.880% and 1.930%, respectively, up sharply from the seven-year lows both marked last Tuesday at 1.510% and 1.535%. Ichiro Ozawa, who late Thursday debated Prime Minister Naoto Kan as the two head into a vote for president of the ruling Democratic Party of Japan on September 14, is considered more of a spending advocate than Kan. Because the DPJ controls the key Lower House of Parliament, if Ozawa is elected party leader he will almost certainly become prime minister. While Kan leads in public opinion polls, Ozawa enjoys the support of a large number of DPJ members, who are the only ones who can vote in the party election. The prospect of a very close vote has many investors anticipating what an Ozawa win would mean for the market. 'An Ozawa victory would likely mean overall spending increases,' says Goldman Sachs economist Chiwoong Lee. Other economists echoed that view. 'If Ozawa is elected and his policies are adopted, upward pressure on bond yields will increase,' said Masaaki Kanno, economist at J.P.Morgan in Tokyo. JGBs may also be hurt in coming weeks as Japanese banks sell the bonds to free up funds for bookkeeping purposes before the end of the country's fiscal half year at the end of September. 'Because of the end of the fiscal half year, players will probably shed their long positions in the 10-year sector and over,' Credit Suisse's Kawano said. 'I don't foresee any come-down in the current situation.
2010/09/03 17:41=DJ DATA SNAP: Euro-Zone Retail Sales Stronger Than Expected
LONDON -Retail sales in the 16 countries that use the euro rose more than expected in July in a fresh sign that consumer demand is helping drive economic growth, official statistics showed Friday.The volume of retail trade rose 0.1% from June, and was 1.1% stronger than in July last year, the European Union's Eurostat statistics agency said. Retail trade in June had risen by 0.2% after Eurostat earlier said it had stagnated during the World Cup month.Economists polled by Dow Jones Newswires had expected the month's retail sales to be flat in July and only 0.7% higher on the year.A breakdown of the data showed that food, drinks and tobacco sales grew by 0.3% on the month in July, while sales in the non-food sector, which includes items such as clothes and books, decreased by 0.1%.The data showed a strong regional variation, with Portugal and France registering high levels of consumer spending, while sales in Spain fell by 3% from June.On Thursday, Eurostat estimated that the euro-zone economy had grown by 1% in the second quarter, mostly driven by strong domestic demand.The higher level of consumer spending helped allay fears that the European economic recovery was extremely vulnerable to a slowdown in its core export markets in the U.S. and China.However, the European recovery is expected to slow later this year as consumers feel the effects of government budget cuts.Eurostat website: www.europa.eu.int/en/comm/eurostat
2010/09/03 17:16=DJ DATA SNAP: UK Aug Services PMI Falls To 16-Month Low
LONDON -The U.K.'s dominant services sector expanded at the slowest pace since April 2009 as the recovery from the recession shows further signs of losing momentum, data showed Friday. Research group Markit and the Chartered Institute of Purchasing & Supply said the services Purchasing Managers Index fell to 51.3 in August from 53.1 in July. That was weaker than expected as economists were forecasting a fall to 52.8, according to a Dow Jones Newswires poll last week. A reading above 50.0 indicates that the sector is expanding, while a reading below 50.0 indicates it is contracting. Both activity and new business rose only modestly and at much slower rates than seen earlier in the year, amid reports of reduced market confidence, Markit said, 'Confidence about the year ahead has failed to recover from June's record drop, with public sector spending cuts and the looming VAT hike in January creating uncertainty over the future direction of the economy,' said Chris Williamson, chief economist at Markit. 'While a double-dip recession remains unlikely, the survey suggests that the risk has increased and that growth looks set to be slow and choppy going forward.
2010/09/03 17:14*DJ 3-Month Euribor Falls To 0.883% Vs 0.884% Thursday
2010/09/03 17:00*DJ Euro-Zone Jun Sales Revised To +0.2% On Mo; +1.2% On Yr
2010/09/03 17:00*DJ Euro-Zone Jul Retail Sales +0.1% On Mo; +1.1% On Yr
2010/09/03 17:00*DJ Euro-Zone Jul Retail Sales Forecast Unch MM; +0.7% YY
2010/09/03 16:44=DJ DATA SNAP: Euro-Zone Private Sector Growth Eases In August
LONDON -Euro-zone private sector growth slowed slightly in August, but employment rose at the fastest rate for more than two years with jobs added in Germany, France, and Italy, the final results of a monthly survey by Markit showed Friday. The Markit Final Euro-Zone Composite Output Index, a gauge of private-sector activity based on a survey of about 4,500 firms, fell to 56.2 in August from 56.7 in July. The reading above the 'no-change' 50.0 mark indicates the sector is still growing. Economists were expecting the preliminary August composite figure of 56.1, released Aug. 23, to be left unrevised, according to a survey by Dow Jones Newswires last week. The Final Markit Euro-Zone Services Business Activity Index, a gauge of activity in the sector, inched up to a three-month high of 55.9 in August from 55.8 in July-- topping the market consensus estimate and preliminary reading of 55.6. Markit Web site: www.markit.com
2010/09/03 16:33*DJ Sterling Drops On Disappointing Services PMI
2010/09/03 16:29*DJ UK Aug Services PMI Forecast At 52.8
2010/09/03 16:29*DJ UK Jul Services PMI Was 53.1
2010/09/03 16:28*DJ UK Aug Services PMI 51.3 - Sources
2010/09/03 16:19*DJ ECB Nowotny:Euro Will Continue To Be A Factor Of Stability
2010/09/03 16:18*DJ ECB Nowotny:See No Dramatic Exchange Rate Developments
2010/09/03 16:17*DJ ECB Nowotny:No Signs, Grounds For Change Of ECB's Infl Tgt
2010/09/03 16:15*DJ ECB Nowotny:No Reason To Doubt In Future Price Stability
2010/09/03 16:00*DJ Euro-Zone Aug Services PMI 55.9 - Sources
2010/09/03 15:59*DJ Euro-Zone Aug Services PMI Forecast At 55.6
2010/09/03 15:59*DJ Euro-Zone Jul Services PMI Was 55.8
2010/09/03 15:55*DJ German Aug Services PMI 57.2 - Sources
2010/09/03 15:54*DJ German Jul Services PMI Was 56.5
2010/09/03 15:53*DJ German Aug Services PMI Forcast At 58.5
2010/09/03 15:49*DJ French Aug Services PMI Forecast At 59.9
2010/09/03 15:49*DJ French Jul Services PMI Was 61.1
2010/09/03 15:48*DJ French Aug Services PMI 60.4 - Sources
2010/09/03 15:46*DJ Italian Aug Services PMI 51.4 - Sources
2010/09/03 15:44*DJ Italian Aug Services PMI Forecast At 50.0
2010/09/03 15:44*DJ Italian Jul Services PMI Was 49.6
2010/09/03 15:42DJ Tokyo Shares Rise On Sony, Toyota Gains; US Jobs Data Eyed -2-
TOKYO -Tokyo stocks rose for the third straight session Friday as Sony and Toyota Motor charged ahead, but trading volume remained low as investors waited nervously for U.S. employment data that could determine the yen's near-term direction.The Nikkei Stock Average rose 51.29 points, or 0.6%, to 9114.13 following Thursday's 1.5% gain. Trading volume totaled just 1.4 billion shares.The Topix index of all the Tokyo Stock Exchange First Section issues gained 4.28 points, or 0.5%, to 823.70, with 23 of 33 subindexes ending in positive territory.Shares extended gains from the open as investors were cheered by two sets of U.S. macroeconomic data released Thursday--retail sales and pending-home sales--that came in better that expected."While a U.S. economic slowdown seems inevitable, excessive pessimism that it would lead to the bottom falling out of the global economy is starting to ease," said Takuo Yamamoto, chief strategist at Mitsubishi UFJ Asset Management.But trading also seemed to lack direction as the Nikkei dipped into negative territory in the afternoon, as investors trimmed their positions ahead of U.S. non-farm payrolls data for August, due at 1230 GMT."The only shift in market sentiment so far has been from downward to flat," said Investrust CEO Hiroyuki Fukunaga. "If the dollar strengthens following the jobs data, it may be possible to temporarily avert the kind of crisis-like situation we saw a short while ago."He was referring to the dollar's recent fall to a 15-year low against the yen and the Nikkei's decline to a 16-month low. He projected Nikkei futures to trade between 8750-9250 next week.Toyota Motor rose 2.1% to Y2,909, closing higher for the first time in five days, after the automaker and its local Chinese joint ventures reported a 16% increase in August vehicle sales in China, marking the first double-digit growth in three months.Other exporters also outperformed with Sony and Canon advancing 2.4% to Y2,485 and 1.3% to Y3,550.JGC gained 1.7% to Y1,398 after Spanish engineering and renewable energy company Abengoa SA said Thursday it has formed a partnership with the Japanese engineering firm to jointly own two 50-megawatt concentrating solar power plants in southern Spain."Uncertainty is still strong for cyclical shares so investors are moving to one of the few sectors where growth can be expected," said Naoki Fujiwara, fund manager at Shinkin Asset Management.Fast Retailing fell 1.2% to Y11,490 on a 9.3% on-year fall in domestic same-store sales at its Uniqlo causal clothing chain in August due to sluggish demand for autumn clothing as a result of the unusually hot summer.Nidec, Japanese maker of precision motors and electronic parts, closed down 2.5% at Y7,400, in brisk volume, on dilution fears after company said Thursday it will issue up to Y100 billion in euro-yen convertible bonds. But traders said the selling is likely short-lived since the actual risk of dilution is small.September Nikkei 225 futures closed up 60 points, or 0.7%, at 9100 on the Osaka Securities Exchange.For the week, the Nikkei rose 1.4%, but remains down 14% year-to-date.
2010/09/03 15:35=DJ DATA SNAP: Swiss August CPI Unchanged On Month; Up 0.3% On Year
ZURICH -The Swiss consumer price index was unchanged on the month in August, after declining in July and June, data released Friday showed. In annual terms it rose 0.3%, the Federal Statistics Office said Friday. This matched the average forecast of four economists polled by Dow Jones Newswires. On a month-on-month basis, transport costs fell 0.3% while accommodation and energy costs dropped 0.2%. Household goods and food and beverage prices climbed 0.4% and 0.3% respectively. Website: www.bfs.admin.ch
2010/09/03 15:15*DJ Swiss Aug CPI Unch On Month
2010/09/03 15:15*DJ Swiss Aug CPI +0.3% On Year; Forecast At +0.3%
2010/09/03 15:02DJ Forex Options: Dollar/Yen Options Drops As Spot Stable
TOKYO -Dollar/yen currency options dropped slightly in Asia Friday as the underlying exchange rate stayed quiet before the release of U.S. payrolls data later in the day, reducing demand for hedges against fluctuations.Benchmark one-month at-the-money volatilities declined to 11.55%/12.25% from 11.75%/12.45% in New York Thursday. The drop came as the dollar stayed in a narrow Y84.24-Y84.42 range in the Asian morning.An options dealer at a major Japanese bank said benchmark volatilities are unlikely to change until the release of U.S. non-farm payroll figures for August at 1230 GMT. After the release, the dealer said, volatilities may decline by 10-20 basis points in the global day since premiums for major events will come off unless the data badly miss market expectations.The median forecast in the poll of economists by Dow Jones Newswires is for the payrolls data to show the U.S. economy lost 110,000 jobs vs 131,000 shed in the previous month.The dealer said one player bought an 11-day dollar-put/yen-call options contract at Y82.00 with implied volatility of 13.1%. Another player bought a 12-day dollar-put/yen-call options contract at Y83.00 with implied volatility of 12.5%. These contracts yield profits if the dollar trades below the set levels at their expiries, suggesting the investors expects the U.S. currency to fall to below Y83.00 in the next 10 days or so.
2010/09/03 14:53=DJ MONEY TALKS: Hints Of Change In The World Monetary System
NEW YORK -Ever since its inception 66 years ago, the International Monetary Fund has fancied itself at the center of the global economy.But only now does the prospect of a multilateral monetary authority providing stability to the international financial system seem even remotely possible. That's because for the first time in decades there are legitimate uncertainties surrounding the one institution that does play that role: the U.S. dollar.In that context, a couple of recent IMF-related announcements are more important than they normally would be.On Monday, the IMF said it would dramatically increase lending to a wide array of developing countries through a new "precautionary credit line" under which they would pre-qualify for loans to be drawn upon in a crisis.Then on Tuesday, South Korea, which will host the Group of 20 nations summit in November, said it would no longer keep its proposal for a global system of currency swaps on the agenda of that meeting. Instead, it would seek a new role for the IMF for containing global financial turmoil--in effect, endorsing the IMF's alternative plan for a "global stabilization mechanism," which would be available to groups of countries.Whether there is support from either the developing world or the G-20 for these two ideas remains to be seen. There is still a stigma associated with borrowing from the IMF, as much as the Fund is trying to break it down. And the U.S., the only country with veto power on the IMF board, might resist reforms that could in some way weaken the power-broking influence that the current system affords it whenever crises erupt.But the balance of power in the global economy is shifting, with Emerging Asia growing at almost double-digit rates while the economies of the U.S. and Europe are mired in post-crisis debt. The fact that these proposals are coming forward is an indication that many nations are wary about depending on the U.S. when its own outlook is so weak.For now, demand for the dollar as a reserve currency is hardly waning. This year's record-breaking bull run in U.S. Treasurys is evidence of that.But China is shifting some of its $2.4 trillion in reserves into Japanese yen and Korean won, which in part explains the recent runup in those currencies. And whereas the Federal Reserve's currency swap agreements with other central banks played a critical role in boosting global dollar liquidity during the 2008 financial crisis, these have since been complemented by bilateral and multilateral swap agreements in which the U.S. does not figure.Most important is the Chiang Mai Initiative, launched in March by the 10 members of the Association of Southeast Asian Nations plus China, Japan and South Korea. That program draws upon a pool of $120 billion in foreign reserves to back a multilateral system of currency swaps that can be triggered if a member faces a currency crisis.South Korea had wanted to use the Chiang Mai Initiative as a template for a global currency swap agreement. But on Tuesday, Seoul's Presidential Committee for the G-20 Summit said "the majority views (among the G-20) are that such an idea could infringe upon the sovereignty of central banks."Presumably, the Fed and the European Central Bank are uncomfortable committing to accept certain currencies of potentially dubious value. Ironically, however, the interest in multilateral solutions is greatly dictated by other countries' concerns about the dollar.In this sense, an expanded IMF stabilization fund--one that's not just geared toward developing nations but toward protecting the whole world from financial turmoil--offers a compromise.Were it to take off, the IMF could evolve into a true international lender of last resort. And giving a multilateral body like the IMF more power at the expense of the U.S. would surely be preferable to having another, potentially less benign superpower simply takeover the reins.The dollar is still king. But times are changing. It's in everybody's interest to design an international framework before the next big crisis erupts
2010/09/03 14:53DJ ECB Wellink: 'Irrelevant' If World Economy Sees Small 'Double Dip' In Near Term
SEOUL -European Central Bank governing council member Nout Wellink said Friday it is 'irrelevant' if the world economy undergoes a mild second recession in the near term, adding that he is most concerned about the longer term challenges of economic restructuring. Asked at a press briefing about the likelihood of a 'double-dip' recession, Wellink said: 'On balance, as far as we can see now, it will go on this recovery process.' 'In a sense it will be irrelevant if we get a small fall back,' he added. Wellink, who is also the president of the Dutch central bank, said he is more concerned with medium and long term challenges, including the exit of extraordinary fiscal and monetary stimulus programs. The consequences of nonconventional monetary policies such as those undertaken by the U.S. Federal Reserve may not be fully understood by the central banks themselves, Wellink said. Indeed, central banks may not even fully understand the causes of the financial crisis, he added.
2010/09/03 14:19=DJ WORLD FOREX: Dollar Up Vs Yen; May Drop Depending On Jobs Data -3-
TOKYO -The dollar rose slightly against the yen in Asia Friday as stable Japanese share prices prompted hedge funds to try to trigger automated stop-loss buying orders. Still, it is very possible that the greenback will reverse course if the much-anticipated U.S. non-farm payrolls data due later in the global day fuel investor speculation on additional easing measures in the near term by the Federal Reserve. The U.S. unit stood at Y84.29 as of 0450 GMT from Y84.21 in New York Thursday as Asian hedge funds were 'modestly' buying the dollar in the thinly traded market, said Daiwa SB Investments fund manager Kenichiro Ikezawa, while the Nikkei Stock Average added to investor sentiment by rising 0.2% to 9082.90 as of 0511 GMT. These funds were eyeing Japanese insurance firms' automated dollar-buying orders placed between Y84.80 and Y85.00 because with the low trading volume, it is possible for the dollar to rise above Y86.00 if the orders are executed, Ikezawa said. But the funds do not have much time left for that, other dealers said, as market conditions will likely change drastically once the U.S. non-farm payrolls data are released at 1230 GMT. 'All eyes are on the U.S. data and many investors believe the outcome may miss economists' consensus. If that's the case, we will see another round of sharp yen gains,' said Jun Kato, a senior dealer at Shinkin Asset Management. A Dow Jones poll of economists forecasts the data to show a loss of 110,000 jobs in August from July, when payrolls also fell by 131,000. If indeed the data turn out worse than expected, the greenback may fall toward Y83.58--the recently marked 15-year low. The euro was at Y108.09 and $1.2822 from Y107.96 and $1.2821 overnight. A lack of market participants ahead of the U.S. data kept the euro to narrow trading bands, dealers said. 'It takes a brave investor to aggressively trade currencies when you know that data coming soon will likely change market sentiment drastically,' Kato said. The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 82.397 from 82.451.
2010/09/03 13:39=DJ WORLD FOREX: Dollar Up Vs Yen; May Drop Depending On Jobs Data
TOKYO -The dollar rose slightly against the yen in Asia Friday as stable Japanese share prices prompted hedge funds to try to trigger automated stop-loss buying orders. Still, it is very possible that the greenback will reverse course if the much-anticipated U.S. non-farm payrolls data due later in the global day fuel investor speculation on additional easing measures in the near term by the Federal Reserve. The U.S. unit stood at Y84.29 as of 0450 GMT from Y84.21 in New York Thursday as Asian hedge funds were 'modestly' buying the dollar in the thinly traded market, said Daiwa SB Investments fund manager Kenichiro Ikezawa, while the Nikkei Stock Average added to investor sentiment by rising 0.2% to 9082.90 as of 0511 GMT. These funds were eyeing Japanese insurance firms' automated dollar-buying orders placed between Y84.80 and Y85.00 because with the low trading volume, it is possible for the dollar to rise above Y86.00 if the orders are executed, Ikezawa said. But the funds do not have much time left for that, other dealers said, as market conditions will likely change drastically once the U.S. non-farm payrolls data are released at 1230 GMT. 'All eyes are on the U.S. data and many investors believe the outcome may miss economists' consensus. If that's the case, we will see another round of sharp yen gains,' said Jun Kato, a senior dealer at Shinkin Asset Management. A Dow Jones poll of economists forecasts the data to show a loss of 110,000 jobs in August from July, when payrolls also fell by 131,000. If indeed the data turn out worse than expected, the greenback may fall toward Y83.58--the recently marked 15-year low. The euro was at Y108.09 and $1.2822 from Y107.96 and $1.2821 overnight. A lack of market participants ahead of the U.S. data kept the euro to narrow trading bands, dealers said. 'It takes a brave investor to aggressively trade currencies when you know that data coming soon will likely change market sentiment drastically,' Kato said. The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 82.397 from 82.451.
2010/09/03 12:37=DJ FOREX VIEW: Many Possible Scenarios Once US Jobs Data Released
When there was bad U.S. data, it made the safe-haven dollar rally and the euro sell off as the figures raised fears about the global economy. When the U.S. data was promising, it boosted the euro and other risk-sensitive currencies and pressured the dollar as the numbers eased those same fears. But trades based on risk sentiment have gotten more complicated recently as the possibility of further quantitative easing in the U.S. entered the equation. In quantitative easing, a central bank uses such methods as purchasing government bonds or other securities to increase the money supply. The dollar's reaction to data is no longer consistent. It slumped last week on news that sales of existing homes dropped a record 27.2% in July, as that report fostered speculation the Federal Reserve could introduce more quantitative easing, a development that could ultimately be bad for the dollar. On Wednesday, the greenback rallied against the euro after stronger-than-expected U.S. manufacturing sector data. As a result, it's a challenge to try to forecast how the dollar and other major currencies will react to Friday's critical nonfarm payrolls report for August. 'It's a wild, complex web of scenarios that could play out,' says David Watt, senior currency strategist at RBC Capital Markets in Toronto. Economists surveyed by Dow Jones Newswires forecast that employment in the U.S. declined by 110,000 in August following a decrease of 131,000 in the previous month. The unemployment rate is expected to rise to 9.6% from 9.5%. A moderately negative nonfarm report will likely boost the dollar as it brings pressure on the improved risk sentiment of the last few sessions, Watt said. Marc Chandler, chief currency strategist at Brown Brothers Harriman in New York, anticipates a 'lukewarm' result that could point to a more stable U.S. economy than other recent releases. 'It would seem we could still get...a number that does not show the U.S. economy is continuing to deteriorate markedly,' Chandler said. Such a result could boost the euro, nudging it towards the $1.3000 area, but it would likely recede again, he said. Thursday afternoon, the euro was at $1.2807 from $1.2800 late Wednesday, according to EBS via CQG. Markedly worse-than-expected data could overwhelm concerns about avoiding risk and become a negative for the dollar through intensifying concern about the U.S. economy and suggesting an increased probability of quantitative easing, said RBC's Watt. A moderately positive number would create a positive tone for risk assets and currencies, but a number that surprised substantially to the upside could boost the U.S. dollar by improving expectations for the U.S. economy, he said. 'The wings can create some interesting scenarios,' Watt said. 'There's all sorts of different dynamics that could be at play.' 'It comes to down to whether or not the U.S. in such bad shape the Fed is going to do [quantitative easing], or are things in the U.S. going to turn out much better than expected?' Watt added. The most positive result for the U.S. dollar would be an upside surprise to the private-sector component of the report and a decline in the unemployment rate, said Joe Manimbo, market analyst at Travelex Global Business Payments. The private payroll number is critical as that component of the labor market is what really drives the economy, he said. Regardless of the result, the August nonfarm payrolls report will likely produce a strong knee-jerk response and set the tone for the coming sessions, Manimbo said. Another factor complicating the market response to the data is the fact U.S. markets will be closed Monday for Labor Day and activity in the markets could ebb as traders make an early exit Friday. 'That might limit what happens in the U.S. after Europe goes home,' said BBH's Chandler.
2010/09/03 11:16DJ BOE Tucker: Progress Made On Capital Requirements For Banks
SEOUL -Bank of England Deputy Governor Paul Tucker said Friday that the Financial Stability Board and the Basel Committee for Banking Supervision are making 'substantive progress' on devising new capital and liquidity requirements for banks, 'notwithstanding what has been in the press.'The two bodies are aiming to prepare a final list of conditions for banks to comply with by the time of a meeting of Group of 20 heads of government in November, a goal that some observers have said may not be realistic.Speaking at a conference on global financial reform, Tucker said that 'many in the banking industry are resisting' new liquidity requirements, 'but it will happen and it will lay down some minimum standards.'Revising banks' capital requirements has been 'much more problematic,' though 'substantive progress is being made on this front,' Tucker said.'Yes there has been some dilution of the proposals from a few months ago, but the dilution so far isn't too great,' he said of the new capital requirements.
2010/09/03 10:46=DJ Japan MOF Unlikely To Intervene If Dollar/Yen Decline Gradual -Sources
TOKYO -Japan's government would find it hard to intervene if the dollar declines gradually against the yen, but the authorities are more determined than ever to act against any unusually rapid foreign exchange rate moves, several people familiar with the matter said. Any intervention by the Ministry of Finance against a sharp rise in the yen would be aimed at curbing market volatility, not attempting to turn the market trend around, the people told Dow Jones Newswires recently. 'If there are no 'excessive fluctuations' in exchange rates, and if the dollar falls against the yen only gradually, it would be very difficult to act,' one of the people said. 'It's unthinkable that (the government) will fight back against the market trend,' he said. But recent pledges by Finance Minister Yoshihiko Noda to take 'decisive' measures in the currency market when necessary were intended to show that the authorities have stepped up their guard against abrupt moves in the yen, the people familiar with the situation said. The tone of Noda's comments was the strongest since he took office in June. Japanese officials in the past have often used the word 'decisive' to indicate they were getting serious about intervention. The comments by the people familiar with the situation underscore increased vigilance in Tokyo against any surge in the yen that could threaten Japan's export-dependent economy, but they also suggest the authorities are unlikely to fight the foreign exchange market if the dollar gradually trends downward against the yen. Japan hasn't intervened in the currency market in more than six years.
2010/09/03 06:02=DJ WORLD FOREX: Dollar Slips Modestly Ahead Of US Jobs Report
NEW YORK -The dollar declined modestly against the euro and yen Thursday, with investors unwilling to stake out new positions ahead of the U.S. employment report for August.The monthly nonfarm payrolls data have a strong effect on the dollar's performance. Weakness on the employment front is taken as a signal that the U.S. recovery remains tepid, which would encourage the Federal Reserve to keep U.S. interest rates at record low levels to stimulate the economy.The U.S. jobs figures, depending on whether they are viewed as positive or negative for recovery, have been a double-edged sword for the dollar. Some months the greenback has gained as a safe-harbor currency; other months, the prospect of low U.S. rates has made higher-yielding currencies more attractive."There is great uncertainty, and the market is acting in a very tentative manner ahead of [Friday's] nonfarm payrolls data," said Jack Spitz, managing director of foreign exchange, financial markets and derivatives at National Bank in Toronto.The euro erased much of its gains from earlier in the session after a better-than-expected U.S. housing report failed to ignite much of a rally for higher-yielding assets. U.S. stocks tussled in and out of the red, pushed and pulled by positive U.S. data and worries about Friday's jobs report. The U.K. pound was among the biggest movers, falling against the dollar and euro after worse-than-expected U.K. housing data.Late Thursday, the euro was at $1.2821 from $1.2800 late Wednesday, according to EBS via CQG. The dollar was at Y84.21 from Y84.47, while the euro was at Y107.96 from Y108.11. The U.K. pound was at $1.5388 from $1.5445. The dollar was at CHF1.0128 from CHF1.0158.The ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies, was at 82.451 from 83.510.To see the euro's move against the dollar, please go to:http://dowjoneswebservices.com/chart/view/4527Data leading into the U.S. payroll figure have given conflicting reads, Spitz said, "but the market is biased for a soft number."Economists surveyed by Dow Jones Newswires forecast that employment in the U.S. declined by 110,000 in August, following a decrease of 131,000 in the previous month. The unemployment rate is expected to rise to 9.6% from 9.5%.European Central Bank President Jean-Claude Trichet said Thursday the euro-zone central bank would extend its tool box of additional bank funding on a "full allotment" basis, citing continued uncertainties in the economy."Overall, the current monetary stance remains accommodative," Trichet told a news conference.Earlier Thursday, the ECB's policy board voted to keep its benchmark interest rate unchanged at 1%."Trichet's statement doesn't change the outcome for interest rates and doesn't change the outlook for the euro zone, so it's really a nonevent," said Dirk Chlench, currency strategist at Landesbank Baden-Wurttemberg in Stuttgart. "I expect [the statement] to have no long-term impact on the euro."The euro found support overnight after the auction of Spanish government debt that was taken as another sign that concerns over euro-zone sovereign issues have faded to the background.Separately, the Swedish krona hit a more-than two-year high against the euro after Sweden's central bank Thursday raised its key interest rate for the second time in a row, underscoring the strength of the country's economy and continuing its gradual normalization of interest levels after heavy rate cuts in the wake of the recent financial downturn.Sweden's economy has emerged relatively unscathed from the economic downturn, reporting a quarterly gross domestic product rise of 3.7% in the second quarter after a 3% increase in the first. Thursday afternoon in New York, the euro was down against the krona at SEK9.3010 from SEK9.3363 after dropping as low as SEK9.2986.With the ICE Dollar Index weakening, Deutsche Bank's PowerShares U.S. Dollar Index Bearish exchange-traded fund was unchanged from late Tuesday, while its PowerShares U.S. Dollar Index Bullish was down 0.01%. The two exchange-traded funds are based on Deutsche Bank currency futures indexes, whose composition mirrors that of the ICE's Dollar Index.
2010/09/03 05:13DJ US Fed Total Discount Window Borrowings Wed $54.03 Bln
WASHINGTON -The Federal Reserve's balance sheet expanded slightly in latest week as the Fed's holdings of U.S. securities inched upward.The Fed's asset holdings in the week ended Sept. 1 rose to $2.305 trillion from $2.304 trillion a week earlier, the central bank said in a weekly report released Thursday.In the latest week, the Fed's holdings of U.S. Treasury securities rose to $786.28 billion on Wednesday from $784.50 billion a week earlier. Holdings of mortgage-backed securities were steady at $1.103 trillion Wednesday.With the economic recovery faltering, the central bank recently said it would reinvest proceeds of maturing mortgage-backed securities held by the Fed into U.S. Treasury securities. The controversial move is aimed at keeping the Fed's asset portfolio from shrinking and at preventing any further tightening in financial conditions.Fed Chairman Ben Bernanke last week also proposed the Fed resume buying long-term bonds as a way to drive long-term interest further down. The Fed already has bought $1.7 trillion in government bonds and mortgage debt as long-term interest rates hover at their lowest levels in decades.In the latest week, commercial bank borrowing rose, increasing to $9 million Wednesday from $4 million a week earlier.Total discount window borrowings fell to $54.03 billion Wednesday from $56.38 billion a week earlier.Meanwhile, U.S. government securities held in custody on behalf of foreign official accounts rose to $3.225 trillion, from $3.197 trillion in the previous week.U.S. Treasurys held in custody on behalf of foreign official accounts as of Wednesday climbed to $2.408 trillion from $2.380 trillion in the previous week.Holdings of agency securities increased to $817.49 billion from the prior week's $816.34 billion.Further data on the Fed's balance sheet, including a breakdown of district-by-district discount window borrowing, can be found at http://federalreserve.gov/releases/h41/current/h41.pdf.
2010/09/03 05:04=DJ US Stocks Climb As Retail, Housing Data Boost Consumer Sector
NEW YORK -U.S. stocks rose Thursday, with consumer companies including Home Depot, Walt Disney and Wal-Mart Stores leading the gains following better-than-expected readings from the housing and retail sectors.The Dow Jones Industrial Average climbed 50.63 points, or 0.49%, to 10320.10, marking its third-straight gain. Home Depot jumped 74 cents, or 2.6%, to 29.41, as the home-improvement retailer was boosted by an unexpected increase in pending-home sales as well as a bigger-than-expected rise in retailers' same-store sales. Walt Disney and Wal-Mart also benefited from improved sentiment around consumer stocks following the reports, with Disney rising 40 cents, or 1.2%, to 33.91, and Wal-Mart up 56 cents, or 1.1%, to 51.76.Hewlett-Packard was also strong, up 47 cents, or 1.2%, to 39.68. The technology giant won the battle to buy 3Par after increasing its offer for the maker of data-storage products to $2.1 billion, prompting rival Dell to withdraw from the nearly two-week bidding war. Dell, which isn't a Dow component, added 24 cents, or 2%, to 12.36. 3Par, which also isn't a Dow component, climbed 80 cents, or 2.5%, to 32.88.International Business Machines kept the Dow's gains in check with a drop of 73 cents, or 0.6%, to 125.04. The stock's decline came as investors fretted over whether H-P's deal to acquire 3Par might help the technology company better compete with IBM.The Nasdaq Composite advanced 23.17, or 1.06%, to 2200.01. The Standard & Poor's 500 index gained 9.81, or 0.91%, to 1090.10.Retailers led the climb after they delivered a late-summer surprise, with sales for the key back-to-school buying month of August coming in better than expected. Among the sector's gainers, Nordstrom jumped 2.44, or 8.1%, to 32.76, Limited Brands added 1.48, or 6.1%, to 25.75, and J.C. Penney advanced 66 cents, or 3.2%, to 21.41."You've had some decent data this week compared to what we saw previously and sentiment's been pretty bearish, so you got a nice little pop," said Michael Church, president of Addison Capital. "We're starting to price back in that maybe it's not an outright collapse of the economy, maybe it's just a muddling-along economy."
2010/09/03 03:18DJ PRECIOUS METALS: Comex Gold Climbs As Dollar Pulls Back
NEW YORK -Gold futures gained modestly Thursday as the dollar retreated and investors looked toward U.S. payrolls data Friday.The most actively traded gold contract, for December delivery, rose $5.30, or 0.4%, to settle at $1,253.40 an ounce on the Comex division of the New York Mercantile Exchange."It seems to be funds playing a trend right now," said Michael Gross, broker and futures analyst with OptionsSellers.com.The generally positive tone to the metal came as the dollar fell against the euro after a successful Spanish government debt auction and the European Central Bank offered few surprises after leaving key rates unchanged."A weaker dollar [was] helping lend support to prices," said Standard Bank analyst Leon Westgate.A weaker dollar often supports dollar-denominated gold by making it less expensive for buyers using other currencies, helping demand.Shortly after gold closed, the ICE Futures U.S. Dollar Index was down 0.06%.The metal was also helped in its role as a perceived safe-haven investment ahead of the closely followed U.S. unemployment report on Friday."Unease ahead of tomorrow's nonfarm payrolls data is picking up, which could also prompt some additional safe-haven buying," Westgate said.The report is expected to show a drop of 110,000 jobs."If it does come out better than expected, you'll probably see gold prices fall pretty sharply," Gross said.Other precious metals traded in New York also gained Thursday, with December silver up 1.4%, October platinum 1% and December palladium 1%. Settlements (ranges include open-outcry and electronic trading): London PM Gold Fix: $1,248.50; previous PM $1,246.50 Spot gold at 1:40 p.m. ET: $1,251.25, up $7.35; Range: $1,243.90-$1,253.30 Dec gold $1,253.40, up $5.30; Range $1,245.30-$1,255.20 Dec silver $19.672, up 27.9 cents; Range $19.345-$19.740 Oct platinum $1,551.50, up $15.80; Range $1,531.00-$1,559.90 Dec palladium $525.25, up $5.15; Range $515.40-$526.45
2010/09/03 01:38DJ BOE's Haldane: China Will Need To Constrain Short-Termism
LONDON -Countries starting to free up their financial markets, like China, need to encourage long-term saving, investment and growth while holding the volatility and consumption resulting from short-termist trading in check, according to Andrew Haldane, the Bank of England's executive director of financial stability.Haldane's comments, due to be delivered at an event in China Sept. 9 but published by the BOE Thursday, come in a speech in which he argues that the trait of patience in financial markets can unlock growth and prosperity, but impatience spurs excessive trading, over-borrowing and under-investment in economies.'Countries, like China, embarking on financial liberalization need to walk a fine line,' Haldane says. 'China today is an intriguing mix of the two paths. Patience is the dominant gene in the high savings rates of households and corporations. Yet the impatience gene is dominant in the behaviour of frothy equity and property.'China today is proof that financial innovation can be a double-edged sword,' says Haldane. 'It is important to keep on the right side of that sword. That calls for careful sequencing of financial reform, in China and elsewhere.'Haldane says China may need to introduce incentives for investors to hold longer-duration assets or disincentives for short-termist behavior, perhaps by applying levies based on the time period over which financial instruments are held.
