Yen Slumps After Japan Intervenes to Curb Rise

Yen Slumps After Japan Intervenes to Curb Rise; Most Asian Stocks Advance

By Shiyin Chen - Aug 4, 2011 9:42 AM GMT+0800

The yen dropped the most in about five months against the dollar after Japan intervened in the foreign-exchange market to weaken its currency. Most Asian stocks rose, led by exporters, and commodities rebounded.

The yen dropped 1.6 percent to 78.32 as of 10:39 a.m. in Tokyo and also fell 1.6 percent to 112.17 versus the euro. Japan’s 10-year bond futures gained, while the Nikkei 225 Stock Average surged 1 percent. The dollar-based MSCI Asia Pacific Index fell 0.2 percent, even as two shares rose for every one that slid. Standard & Poor’s 500 Index futures added 0.6 percent. Oil rose for the first time in five days and metals jumped, led by a 1.2 percent gain in zinc.

Finance Minister Yoshihiko Noda said Japan took unilateral action to sell the yen, which earlier this week neared a post- war record. The move comes a day after the Swiss central bank cut interest rates and said it will boost the supply of francs to curb the “massively overvalued” currency. Concern the U.S. recovery is faltering had driven investors toward the relative safety of the yen and the franc, and is spurring speculation the Federal Reserve will start another stimulus program.

Most Asia markets thrashed over economic fears

Shipping-, resource-related stocks tumble, but gold miners climb

By V. Phani Kumar and Sarah Turner, MarketWatch

HONG KONG (MarketWatch) — Most Asian shares were beaten down Wednesday as mounting concerns about slowing global growth and shaky sovereign debt led investors to dump equities in favor of investments perceived to be safer, such as gold.

Extending losses suffered Tuesday on signs that global manufacturing was slowing, Japan’s Nikkei Stock Average /quotes/zigman/715506 JP:NIK -2.15% ended the day 2.1% lower at 9,637.14, while Australia’s S&P/ASX 200 index /quotes/zigman/1653884 AU:XJO -2.27% skidded 2.3% to 4,332.8.

Hong Kong’s Hang Seng Index /quotes/zigman/2622475 HK:HSI -1.91% fell 1.9% to 21,992.72, and South Korea’s Kospi KR:0100 -2.59% sank 2.6% to 2,066.26. Taiwan’s Taiex gave up 1.5% to 8,456.86 while China’s Shanghai Composite index /quotes/zigman/1859015 CN:000001 -0.03% ended little changed at 2,678.48. full stories...

FUNDVIEW-U.S. debt problems keep FX managers away from dollars

By Naomi Tajitsu

LONDON | Mon Aug 1, 2011 9:44am EDT

LONDON Aug 1 (Reuters) - A deal to increase U.S. borrowing may prevent a debt default, but currency fund managers say it would do little to shake off their bearish stance on the dollar, adding they would remain underweight on assets denominated in the U.S. currency.

At the same time, they are hesitant to pick up Swiss franc-denominated assets, given the franc's surge to all-time highs. They preferred to stay overweight in emerging currencies on the view that developing economies will continue to grow faster than developed ones.

Some see the risk the U.S. may lose its AAA rating even if the Senate on Monday passes a deal to raise the debt ceiling and cut about $2.4 trillion from the deficit over the next decade.

Managers on Monday said this was another reason to avoid the world's most liquid currency, along with weak U.S. economic growth prospects and the ongoing shift away from dollars by reserve managers.

"Even if this plan goes through, it won't change things much," said Thanos Papasavvas, head of currency management at Investec Asset Management, which has $10 billion in assets under management.

"(Because of) the structural story, the cyclical story, and the reserves story, we have a pretty negative outlook on the dollar," he said, adding he saw a "decent" possibility that Washington would lose its triple-A status.

Papasavvas said he remained underweight dollar assets as a result, while adding he was overweight those denominated in euros and Asian and emerging currencies. more stories...

EUR/USD, bullish momentum suggests shallow pullbacks

Forex: EUR/USD, bullish momentum suggests shallow pullbacks

Fri, Jul 22 2011, 00:46 GMT | FXstreet.com

FXstreet.com (Barcelona) - The Euro soared across the board reaching 1.4435 against the dollar, after the EU summit outcome: members had agreed to extend the loans to Greece from 7.5 to 15 years while interest rate has been lowered to 3.5% on new loans. The bullish momentum extended over the American afternoon and even on early Asian hours, but is now on the retreat towards 1.4385.

Valeria Bednarik, Chief Analyst at FXstreet.com still sees EUR/USD holding a strong bullish momentum: "The pair seems now correcting extreme overbought conditions before aiming higher; the upside is supported by general buying mood, as local share markets had the same tone of their oversea partners. Hourly chart, shows a still strong bullish momentum that should help keep the downside limited." more....

Do you have the heart for foreign exchange trading?

Do you have the heart for foreign exchange trading?

When he isn’t working as a Sacramento-area chiropractor, Neil Kalia likes to watch the currencies of other countries closely. Very closely.

Kalia, 34, estimates that he spends between 40 and 50 hours a week boning up on how the Euro, Australian dollar and British pound stack up against the U.S. dollar. When he trades, it’s usually quick: “anywhere between 24 hours to two weeks, I get out.”

Statistics confirm tremendous growth in foreign exchange trading by individuals such as Kalia in the past decade. According to the Bank of International Settlements (BIS), daily volume of foreign exchange trading has nearly quadrupled since 2001, from $1.2 trillion in 2001 to just below $4 trillion today. “That’s more than all the stock market volume combined on a daily basis, and that goes back to how liquid the currency market is,” says Brian Dolan, the chief currency strategist at FOREX.com and the co-author of “Currency Trading for Dummies.”

But it’s much more debatable to what extent currency belongs in the average investor’s portfolio, how trades should transpire — and who should execute them. Insiders stress that mapping the peaks and valleys of pounds and dollars is not for hobbyists, but well-equipped pros.

“The average investor should not speculate in currency, in much the same way I would say the average person should avoid going to Vegas,” says Steve Horan, head of Private Wealth at CFA Institute, and co-author of “The Forbes/CFA Institute Investment Course.” “There are a lot of smart people playing the currency market; they’ve got more tools, more data and more training — and I don’t want to play against them.”

more story...

Gold hits record high on U.S.,

Gold hits record high on U.S., Europe debt worries

By Rujun Shen

SINGAPORE | Sun Jul 17, 2011 10:41pm EDT

SINGAPORE (Reuters) - Spot gold touched a record high on Monday, reflecting persistent worries about the euro zone debt crisis and a growing threat of a U.S. government default.

Spot gold rose to an all-time peak of $1,598.41 and U.S. gold hit a record high of $1,599.20.

The appetite for bullion as a safe storage of value increased, as investors feared that the stalemate in negotiations over U.S. deficit plan could lead to a default, which might wreak havoc in global markets and send the world's top economy back to recession.

Adding to worries about the economic growth, U.S. consumer confidence hit a near 2-1/2-year low in early July and manufacturing output stalled in June.

"The political uncertainties in the United States and Europe will be an ongoing theme and safe-haven demand will continue," said Natalie Robertson, a commodities analyst at ANZ. more story...

Consumer Sentiment in U.S. Falls to 2-Year Low

By Jillian Berman - Jul 15, 2011 10:21 PM GMT+0800

Confidence among U.S. consumers unexpectedly fell in July to the lowest level in more than two years, adding to concern that weak employment gains and falling home prices may keep households from spending.

The Thomson Reuters/University of Michigan preliminary index of consumer sentiment decreased to 63.8, the weakest reading since March 2009, from 71.5 the prior month. The gauge was projected to rise to 72.2, according to the median forecast of 62 economists surveyed by Bloomberg News.

Slow jobs gains and falling home values may be weakening Americans’ outlooks, underscoring Federal Reserve Chairman Ben S. Bernanke comments to Congress earlier this week. At the same time, gas prices still north of $3.50 may also be weighing on consumers, posing a risk that spending will cool.

“Consumers are still concerned about the economy and the primary driver of that is the sluggish labor market,” said Ryan Wang an economist at HSBC Securities USA Inc. in New York said before the report. “ The relatively low level of sentiment is in fact consistent with the modest growth of retail spending that we’ve seen, particularly in the last three months, and that pattern is likely to hold.” more story...

What if the U.S. Fails to Reach Debt Limit Deal?

Posted by Scott Boyd at 10:02 am UTC, 07/15/2011

Most analysts believe U.S. lawmakers will ultimately arrive at an agreement to lift the $14.3 trillion debt limit in time to avoid defaulting on upcoming interest and debt payments. And just in case the two sides need a little encouragement or reminder of the potential consequences should they fail to arrive at a deal, Moody’s Investors Services and Standard & Poor’s have both served notice that the U.S. is under credit review pending the outcome of the discussions.

The warnings come as representatives from both the Democrats and the Republicans continue to hammer out an agreement to pave the way for the government to borrow beyond the existing debt limit. The Treasury Department has named August 2nd as the deadline, warning that failing to act before this date will leave the country without sufficient funds to meet upcoming debt obligations. After this date, the government will effectively be broke and have no option but to default.

On Wednesday, Federal Reserve Chairman Ben Bernanke used part of his appearance before the Senate Banking Committee to encourage federal lawmakers to get a deal done before the Treasury Department’s cut-off date. Bernanke told the committee that should the Treasury default, the action would send “shockwaves” throughout the global economy.

But what if a deal is not made in time? What would Bernanke’s “shockwaves” look like?

For starters, America’s credit rating would immediately be downgraded to reflect the new “default” status. The government would still have to borrow to cover its operational deficit but with the loss of it’s triple-A rating, borrowing costs would increase dramatically – assuming historical lenders including China, Japan, and Britain would still be willing to bankroll the country. The alternative would be a combination of steep tax hikes and deep spending cuts to cover the shortfall. Full story..

Italy expected to pass crucial bond auction test

Italy expected to pass crucial bond auction test

(Reuters) - Italy is expected to succeed in selling bonds on Thursday in a crucial test of its ability to continue funding itself from the markets. But a smooth sale would not remove longer-term worries over its financial health. more....

EUR/USD Classical Technical Report 07.14

By Joel Kruger , Dailyfx

EUR/USD: Overall, price action remains quite bearish and we continue to like the idea of selling into rallies in anticipation of a more sizeable pullback below the 200-Day SMA. The longer-term moving average resides by the 1.3900 figure and a clear break below will open the door for a test of next key support in the 1.3750. In the interim, look for the formation of a fresh lower top somewhere ahead of 1.4400 ahead of the next drop.

Obama and lawmakers face fresh doubts on debt deal

(Reuters) - Sharply divided by partisan bickering, President Barack Obama and top Republicans face growing doubts on Thursday about the prospects for reaching a deal to avoid a potentially disastrous debt default. more...

5 reasons why the Euro isn’t trading much weaker

5 reasons why the Euro isn’t trading much weaker

July 13th 2011: 5 reasons why the Euro isn’t trading much weaker

Amid the lurid media headlines during the past few days of Euro-zone crisis, panic and collapse, the surprising feature is not that the Euro has fallen – the big shock is that the currency is not trading substantially weaker. There is increasing evidence of longer-term forces at play which are keeping the Euro afloat. If we rewind just over 12 months ago to when the Greek crisis first erupted, the Euro hit a low below 1.20 against the dollar. Despite the debt crisis being much more severe this time and the Euro’s future in very serious doubt, EUR/USD is still close to 1.40.

The Euro-zone backdrop remains precarious at best with several of the weaker members already passing beyond their event horizon as they get pulled towards the black hole of default. Greece has no viable escape route from default with Portugal and Ireland also have no real possibility of escaping from the debt trap as they remain mired in recession. To avoid default, an economy either needs to let inflation and exports improve the debt-servicing profile through devaluation or there must be capital transfers and neither of these are possible under the current Euro set-up. It is increasingly likely that there will be a destructive break-up of the Euro-zone and the currency is likely to fall sharply this quarter, but strategic players are looking at the long-term view and to what happens after any break up.more...

Yen Declines Against Dollar Amid Speculation Japan Will Weaken Currency

The yen fell against the dollar amid speculation Japan will weaken the currency to support exporters. The yen traded at 79.21 per dollar as of 6:38 a.m. in London from 78.98 yesterday in New York. It was as strong as 78.47 earlier today.

DJs blames Gillard government taxes for profit plunge Read more: http://www.smh.com.au/business/djs-blames-gillard-government-taxes-for-profit-plunge

DJs blames Gillard government taxes for profit plunge

Read more: http://www.smh.com.au/business/djs-blames-gillard-government-taxes-for-profit-plunge-20110714-1hf97.html#ixzz1S3gWu591

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Analysis Picks For Eur/ Cad

This morning we noticed some gross underperformance in the cross, with the Canadian Dollar price action standing out as Cad rallied across the board, while all other currencies were showing weaker against the USD. With the market dropping sharply in Asia to already exceed its daily ATR, and with no decent fundamental catalyst for the move, we were quite content on kicking off the year with a long position on the cross which was well oversold on the hourly chart. The downside risk initially seemed to be very limited, and with the other Euro/Commodity crosses showing evidence of basing, we initiated the trade. From here, a break back above Friday’s 1.3380 highs will be required to officially relieve short-term downside pressures, but we have already taken advantage of the most recent bounce into the money and have gone ahead and booked some profits while also eliminating any risk by moving our stop-loss to break-even. POSITION: LONG @1.3192 FOR AN OPEN OBJECTIVE; BOOKED PROFIT ON HALF @1.3250; REVISED STOP @1.3192.

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