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Saturday, August 29, 2009
LONDON: Oil prices edged towards 73 dollars on Friday, extending the previous day's rally as the market was buoyed by rising equities and a weakening US dollar, analysts said. New York's main futures contract, light sweet crude for October delivery, rose 21 cents to 72.70 dollars a barrel in afternoon trade. Brent North Sea crude for delivery in October gained 34 cents to 72.85 dollars. Crude futures had rebounded Thursday after two days of losses, lifted by a weaker dollar late in the session and rallying US share prices. "The catalyst behind the recovery was based as usual on stocks flipping back into positive territory combined with a renewed weakening in the US dollar," said ODL Securities analyst Marius Paun. Wall Street's blue-chip Dow Jones Industrial Average rose 0.39 percent to 9,580.63 points, ending higher for an eighth straight session and extending its longest winning streak in 28 months. European equities also rallied Friday, boosted by strong gains on Wall Street as investors digested news that the British recession was not as deep as expected in the second quarter. London's benchmark FTSE 100 index of leading shares was up 0.98 percent to 4,916.54 points in late afternoon deals. British gross domestic product (GDP) shrank 0.7 percent in the second quarter of 2009 compared with the first three months of the year, official data showed on Friday. That was a modest improvement on the previous estimate of a 0.8-percent contraction. Oil also won support from a weaker dollar, which makes dollar-priced crude cheaper for buyers using stronger currencies and therefore tends to stimulate demand and lift prices. The dollar fell on Friday against the euro after more strong eurozone economic data, traders said. Approaching midday trade in London, the European single currency increased to 1.4358 dollars from 1.4345 dollars in New York late on Thursday. Earlier this week, New York oil had spiked to 75.00 dollars on Tuesday for the first time in 10 months after strong US consumer confidence data, but fell back on profit-taking after failing to break through that key barrier. Oil lost more ground on Wednesday after official data showed a surprise jump in crude inventories in the United States, the world's biggest energy consuming nation. The US Department of Energy (DoE) said American crude stockpiles rose 200,000 barrels to 343.8 million in the week ending August 21, confounding expectations for a 600,000-barrel drop.
European business and consumer confidence firmed in August for a fifth month
0 comments Posted by shuseel at 6:45 PM
European business and consumer confidence firmed in August for a fifth month running, an EU survey showed on Friday, adding to a recent string of encouraging news for Europe's struggling economies. The European Commission's economic sentiment indicator for the 16 nations using the euro single currency rose to 80.6 points from 76 points in July, continuing a gradual climb away from a record low 64.6 points in March.
The figure defied the expectations of analysts, polled by Dow Jones Newswires, who had predicted a more modest rise to 78 points.
"Recovery of the industrial confidence indicator continued, backed by a strong increase in production expectations and manufacturers' assessment of order books," the EU's executive body said in a statement.
However, it noted that "stocks of finished goods, production expectations and order books remain well below their long-term averages."
The long-term average rate, since 1990, is 100.
Among the larger EU economies, the greatest signs of improvement in confidence were seen in Britain, up 9.7 points, followed by the Netherlands, 7.6 points, and European economic powerhouse Germany which saw economic sentiment rise by 5.1 points in August.
There were also "noteworthy" gains in Poland, Italy and Spain.
The commission said the increase was due to a general improvement across the board, with only retail trade a little sluggish. The services sector gained considerably, while industry continued to climb out of the trough from March.
In the wider 27-nation European Union, the economic sentiment indicator rose to 80.9 points from 75 points in July.
Analysts said the figures bolstered hopes for a recovery.
"All in all, today?s indicators will be an important part of the ECB's (European Central Bank) briefing files for next week," said Carsten Brzeski at Global Economics.
"Central bankers will be facing a somewhat changed economic environment: the worst is over and the economy is stabilising," he said, but warned: "the labour market and a possible credit crunch are clear speed bumps on the road to recovery."
The commission's separate business climate indicator also continued to recover, improving for a fifth consecutive month with a rise to negative 2.21 points from minus 2.70 points in July.
Improvement was particularly strong in production trends, while "both order books and export order books continued to improve from the trough reached in June.
"Managers' opinion of stocks of finished goods improved as well, even though the level of stocks was still considered excessive," the commission said.
Recent data has shown European factory orders up, with the eurozone monthly trade surplus doubling.
Germany and France have lumbered out of recession and very nearly brought the rest of the eurozone with them.
However amid fears of double-dip recession, EU commission chief Jose Manuel Barroso warned that Europe's economy has not made a "firm recovery" from the crisis and the situation remains "very volatile."
Thursday, August 27, 2009
Mexico Peso Gains to Highest Since November on Economic Outlook
0 comments Posted by shuseel at 7:55 PM
Mexico’s peso rose to its highest level since November amid speculation the global recession is easing, boosting global stocks and stoking investors appetite for the nation’s financial assets.The currency strengthened 0.1 percent to 12.8152 per U.S. dollar at 10:44 a.m. New York time, from 12.833 on Aug. 21. Earlier it touched 12.7674, the strongest since Nov. 11.
“The peso is at very strong levels and it will likely continue to gain,” said Alejandro Hernandez, who oversees about $1 billion in fixed-income assets at Grupo Financiero Interacciones SA in Mexico City. “Stocks continue to rise and economic data looks good.”
The peso led gains in Latin American currencies. Stocks in the U.S. and Europe advanced as Federal Reserve Chairman Ben S. Bernanke and European Central Bank President Jean-Claude Trichet, speaking at the annual central bankers’ symposium in Jackson Hole, Wyoming, said the world economy is pulling out of recession.
“As long as U.S. growth is on track for a recovery, then there are reasons to be optimistic about Mexico,” Benito Berber, an economist at RBS Greenwich Capital Markets in Greenwich, Connecticut wrote in a report today. Mexico sends 80 percent of its exports to the U.S.
Yields on Mexico’s 10 percent bond were little changed at 8.43 percent, according to Banco Santander SA. The price rose 0.02 centavo to 113.42 centavos per peso.
Mexico’s consumer prices rose 0.11 percent in the first half of August, the central bank said today. That’s less than the 0.2 percent median forecast in a Bloomberg News survey of 14 economists.
The dollar may extend its decline against the euro on reduced demand for safety after crude oil
0 comments Posted by shuseel at 7:29 PM
The dollar may extend its decline against the euro on reduced demand for safety after crude oil and U.S. stocks rebounded, encouraging traders to sell the U.S. currency to limit losses.The Canadian dollar advanced yesterday against its U.S. counterpart by the most in two weeks as crude oil rose after failing to sustain a drop below $70 a barrel. The Norwegian krone also gained. The dollar depreciated versus most of its major counterparts, declining to the weakest level this year versus the Swiss franc.
“The turnaround in oil and equities set off the moves in commodity currencies,” said Alan Ruskin, head of international currency strategy in North America at RBS Securities Inc. in Stamford, Conn. “Long-dollar positions have been stopped out big-time.” A long is a bet a currency will appreciate.
The euro traded at $1.4346 at 6:09 a.m. in Tokyo, following a 0.6 percent gain yesterday. The franc was at 1.0588 versus the dollar after touching 1.0531, the strongest level since Dec. 30. The dollar bought 93.48 yen after earlier trading at 93.22, the lowest level since July 22. The euro was at 134.17 yen.
The European currency’s gains versus the dollar accelerated yesterday after breaking through $1.4280 at 2:05 p.m. in New York. The 16-nation currency reached the most in almost three weeks at $1.4406 a half-hour later at 2:35 p.m.
The level of $1.4280 was significant because it’s where the euro resumed declines on Aug. 26 after trying to overcome a previous loss, said Andrew Chaveriat, a currency strategist at BNP Paribas SA in New York. Traders typically place so-called stop losses at key levels to protect themselves when a bet moves in the opposite direction.
‘Thin’ Markets
“These markets are very thin, so if someone has a stop for $100 million or $200 million, they could really start pushing the market around a little bit, and that’s what I think happened,” Chaveriat said.
The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six major U.S. trading partners, dropped as much as 1 percent to 77.851, the biggest intraday decrease since Aug. 3.
Crude oil for October delivery rose 1.2 percent to $72.25 a barrel on the New York Mercantile Exchange after losing as much as 2.2 percent. The Standard & Poor’s 500 Index added 0.3 percent after earlier dropping as much as 1.2 percent.
Canada’s currency advanced as much as 1.3 percent to C$1.0832 versus its U.S. counterpart yesterday in the biggest intraday advance since Aug. 12. The krone gained 0.7 percent to 6.0237. Oil generates more than half of Canada’s export revenue, and Norway is the world’s fifth-biggest seller of crude oil.
Aussie Dollar
Australia’s dollar rose during New York trading against all of its major counterparts after the Bureau of Statistics said in Sydney that capital spending unexpectedly rose 3.3 percent in the three months through June from the first quarter, when it tumbled a revised 7.3 percent.
The Aussie extended its gain versus the dollar as oil rebounded, appreciating 1.4 percent to 83.97 U.S. cents. Australia relies on exports of commodities such as iron ore and coal for 21 percent of its gross domestic product.
Sterling slid as much as 0.5 percent to 88.20 pence per euro, the weakest level since June 5. The pound gained 0.2 percent to $1.6287 after earlier dropping as much as 0.6 percent to $1.6154, the lowest level since July 13.
U.K. business investment fell 10.4 percent in the second quarter from the previous three months, the Office for National Statistics said yesterday in London. The reading was down 18.4 percent from a year earlier.
Bank of England
The Bank of England has cut its benchmark interest rate to 0.5 percent, allocated 175 billion pounds ($283 billion) to buy bonds and is raising 220 billion pounds of debt through March 2010 to fund stimulus packages and bank bailouts.
Libor for three-month dollar loans fell to 0.36063 percent yesterday, and the three-month yen rate advanced to 0.39313 percent. The benchmark for bank borrowing costs fell below its Japanese counterpart on Aug. 24 for the first time in 16 years, rates from the British Bankers’ Association show.
The dollar fluctuated against the euro earlier yesterday after a Commerce Department report showed the world’s largest economy contracted less than economists forecast as companies reduced inventories, spending started to climb and profits grew.
“Corporate America has been ruthless,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. in New York, in an interview on Bloomberg Radio. “They’ve cut industrial production. They’ve cut output. But they’ve cut workers even more, so productivity has gone up. This will help strengthen the dollar as foreign investors bring money to the United States and more Americans keep their money at home.”
Gross domestic product shrank 1 percent in the three months ended in June, matching the initial estimate on July 31. The contraction was less than the 1.5 percent median forecast in a Bloomberg News survey of 75 economists
LONDON — The euro dipped against the dollar Friday on profit-taking after a rally a day earlier in the wake of surprisingly positive eurozone economic data, dealers said.Approaching midday trade here, the European single currency dipped to 1.4283 dollars from 1.4287 dollars in New York late on Thursday.
Against the Japanese unit, the dollar fell to 95.17 yen from 95.36 yen late Thursday.
The dollar was lacklustre after data released Thursday showed US retail sales unexpectedly dipped 0.1 percent in July, highlighting ongoing consumer weakness in the world's largest economy.
New claims for jobless benefits in the United States meanwhile unexpectedly rose by 4,000 in the past week to 558,000.
The gloomy numbers were released just hours after Germany and France both announced surprise economic growth of 0.3 percent for April-June, emerging from the worst recession in decades.
"Markets had until recently anticipated that the US will be the first major economy to emerge from recession," said Dariusz Kowalczyk, chief investment strategist at SJS Markets in Hong Kong.
"The resulting improvement in growth and interest rate differentials was supposed to push the greenback up versus other majors," he said.
"But data released during the past 24 hours makes such scenario a bit less certain and has led to a decline in the dollar."
The positive eurozone data reinforced investor optimism that the worst of the global economic downturn is over.
Japanese data due out on Monday was expected to show that the world's second-largest economy also rebounded between April and June.
The Federal Reserve on Wednesday said that the US economy was stabilising and that it would gradually scale back its massive effort to pump liquidity into the creaking financial system.
Elsewhere on Friday, the safe-haven yen rose against the dollar and the euro as a drop in Chinese share prices reduced investors' appetite for risk, dealers said.
The Japanese currency, seen as a relatively safe bet during times of uncertainty, rose after Chinese shares slid on renewed concerns that Beijing will tighten its monetary policy, dealers said.
"Euro/yen selling pressure, which is coming from the Chinese stock weakness, is bringing the euro down against the dollar as well," Osao Iizuka, a senior dealer at Sumitomo Trust & Banking, told Dow Jones Newswires.
In London on Friday, the euro was changing hands at 1.4283 dollars against 1.4287 dollars late on Thursday, at 135.94 yen (136.25), 0.8627 pounds (0.8615) and 1.5290 Swiss francs (1.5285).
The dollar stood at 95.17 yen (95.36) and 1.0705 Swiss francs (1.0697).
The pound was at 1.6554 dollars (1.6583).
On the London Bullion Market, the price of gold increased to 956 dollars an ounce from 953.50 dollars an ounce late on Thursday.
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