Clippers Investment

Bank of America Plans to Raise $10 Billion in Capital

2009-05-04T20:43:00.000+07:00

Bank of America is working on plans to raise more than $10 billion in fresh capital, even as it and Citigroup launch last-ditch attempts to convince the U.S. government they do not need to bolster their balance sheets, the Financial Times reported.

Citing people close to the situation, the paper said that Citi [C 3.13 0.16 (+5.39%) ], Bank of America [BAC 9.06 0.36 (+4.14%) ] and at least two other lenders will on Monday attempt to convince the U.S. Treasury and Federal Reserve that the findings of "stress tests" into their financial health were too pessimistic.

Bank of America, which has had $45 billion in government aid, was found to need well in excess of $10 billion, the Financial Times reported on its website on Sunday, citing sources.

Regional lenders Wells Fargo [WFC 20.67 1.06 (+5.41%) ] and PNC Financial [PNC 38.8225 1.0025 (+2.65%) ]were also among the banks that would need to raise more capital unless they could persuade the authorities their findings were wrong, the paper reported, citing people close to the situation.

Nineteen U.S. banks are undergoing a stress test, designed to ensure these institutions have enough capital to withstand the recession. Banks received preliminary results of the test last week, and many are now negotiating with the Fed over whether they have enough tangible common equity, a measure of capital strength.

Analysts believe the government will say all 19 banks are solvent when the results are announced on May 7, but that some banks need to raise more capital than others to cushion themselves if the recession worsens.

Citi and Bank of America are the likeliest to need more capital, analysts have said.

The Wall Street Journal earlier reported that Citi may need to raise as much as $10 billion.

Bank of America officials were not immediately available to comment on the report.

A Fed spokesperson declined to comment on the FT report.

Emerging Markets May Rally by Year-End, Mobius Says

2009-05-04T20:35:00.000+07:00

(Bloomberg) -- Emerging-market stocks may “break out” into a bull market at the end of the year as falling interest rates and easing inflation make equities more attractive, Templeton Asset Management Ltd.’s Mark Mobius said.

Mobius reiterated that emerging markets are “building a base” for the next rally. Chrysler LLC’s bankruptcy filing and other “short-term risks” may hold back the rally, while speculators may bet stocks will fall, he said.

“We are at the base building period for the next bull market,” Mobius, who helps oversee $20 billion in emerging- market assets at San Mateo, California-based Templeton, said yesterday in an interview in Bali, Indonesia, where he’s attending a conference. “What I see happening is perhaps this continuing till the end of the year, and then a break out.”

Developing markets made up all 10 of the best-performing stock indexes in 2009, led by Peru and China. The MSCI Emerging Markets Index added 2.7 percent to 680.75 as of 1:38 p.m. in Singapore, a seven-month high, extending the gain this year to 20 percent. The MSCI World Index retreated 2.3 percent in 2009.

Since Mobius said on March 23 that the base for the rally is being built, the emerging-market gauge rose 23 percent, outpacing the global measure’s 14 percent advance.

Government stimulus programs from the U.S. to China have prompted Federal Reserve Chairman Ben S. Bernanke to say there’s evidence of “green shoots” in some markets. Reports on consumer confidence and manufacturing in the world’s largest economy last week spurred optimism the worst of the recession may be over.

Growth Outlook

The International Monetary Fund, the Washington-based lender with 185 member nations, said last month the world economy may shrink 1.3 percent this year, compared with its January prediction of 0.5 percent growth.

Short sellers are increasing bets against developing-nation stocks by the most since March 2007, a signal the biggest rally in 16 years may fizzle as profits plunge.

Short interest in the iShares MSCI Emerging Markets Index fund, which tracks equities in 23 developing nations, climbed 51 percent in March, the biggest jump in two years, according to New York Stock Exchange data compiled by Bloomberg. The growth in short sales, where investors borrow stock and sell it on the expectation prices will fall, marks a shift from the last three rebounds in emerging-market stocks. In those cases, traders closed out their bets.

Chrysler, based in Auburn Hills, Michigan, is the latest U.S. company to file for bankruptcy after a group of 20 secured lenders rejected an offer by the government that would have paid them $2.25 billion for $6.9 billion of debt, or 33 cents on the dollar.

‘Green Shoots’

“There are green shoots in the American economy,” Mobius said. “Some companies will declare lower earnings but there are still companies posting rising earnings.”

BNP Paribas Asset Management was also upbeat about the recovery of emerging-market stocks, saying shares in Brazil, Russia, India and China present the best combination for a recovery in economic growth amid continued volatility.

The investment firm turned positive on Russia in March and now holds more shares in the four so-called BRIC markets than benchmark indexes suggest, Martial Godet, who helps oversee the equivalent of $44 billion of assets as Paris-based head of investment management for new markets at BNP Paribas, said in an April 30 interview in Singapore.

‘Very Cheap’

Credit Suisse Asset Management said Asian stocks will be the world’s best performers this year as earnings growth in the region rebounds first and the Chinese government’s stimulus program bolsters the economy. After Asia, investors should buy stocks in Latin America and the U.S., as Europe and Japan underperform, said Bob Parker, who helps oversee $600 billion as London-based vice chairman of Credit Suisse Asset.

“Asian equity markets, particularly if you look at price- earnings figures relative to dividends, earnings growth and GDP growth, are very cheap indeed,” Parker said today in an interview in Bali, where he is also attending a conference.

The emerging-market index is valued at 1.58 times book value, lower than its five-year average of 2.1 times, even after the rebound. Based on estimated earnings, the measure has a multiple of 13 times.

“If you look at price-to-book value, you see that it’s below the average that we’ve seen for a number of years,” Mobius said. “We are not buying stocks that have a price- earnings ratio of over 10, by and large, with some exceptions, and we look at a five year time frame. Looking five years out, things look pretty cheap.”

Hong Kong-listed Chinese companies will be the best bet when the emerging markets embark on the bull market, with companies that supply commodities and cater to consumers benefiting the most, Mobius said. He also favors shares in Turkey, South Africa and Brazil, he added.

To contact the reporter on this story: Chen Shiyin in Singapore at schen37@bloomberg.net

Yen Drops as Speculation Global Slump Waning Spurs Yield Demand

2009-05-04T20:30:00.001+07:00

(Bloomberg) -- The yen weakened for a fourth day against the dollar as stocks advanced and signs the recession is easing spurred investors to buy riskier assets.

The Japanese currency also fell against higher-yielding currencies including South Africa’s rand after China’s manufacturing expanded for the first time in nine months and the MSCI World Index climbed 0.4 percent, its fourth straight gain. The dollar rose against the euro before a U.S. report tomorrow that may show an improvement in service industries, which account for almost 90 percent of the world’s largest economy.

“It’s difficult to be optimistic for the yen at a time when risk aversion is declining,” said Michael Klawitter, a currency strategist with Dresdner Kleinwort in Frankfurt. “Downward momentum in the economy seems to be slowing.”

The yen weakened to 99.33 per dollar as of 7:57 a.m. in New York from 99.11 on May 1, after earlier trading at 99.57, near its lowest level since April 17. Japan’s currency was little changed at 131.49 per euro, from 131.54. The dollar advanced to $1.3240 per euro from $1.3273.

The Institute for Supply Management’s index of non- manufacturing businesses probably climbed to 42 in April, according to a Bloomberg survey of economists. Readings below 50 signal contraction. The Tempe, Arizona-based group will release the figures tomorrow.

Fluctuations of the yen versus the dollar fell, a sign investors are betting the rally in riskier assets will continue, according to data compiled by Bloomberg. Volatility calculated from one-month yen options was 13.9 percent, from 18.5 percent by the end of last month and a high of 41.8 percent Oct. 24.

Euro’s Slide

The euro declined versus the dollar after Germany’s Federal Statistics Office in Wiesbaden said that retail sales, adjusted for inflation and seasonal swings, unexpectedly fell 1 percent in March from February and the European Commission cut its forecasts for economic growth, predicting a 4 percent contraction in 2009 and 0.1 percent decline in 2010.

The shrinking 16-nation economy will prompt the European Central Bank to lower the main refinancing rate by 25 basis points to 1 percent on May 7, according to the median forecast of 44 economists surveyed by Bloomberg.

“The euro is trading at the upper end of its range, so who wants to bet on the euro before the ECB event this week?” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. in New York. “‘Stock markets have rallied since the start of April and the euro is flat.”

The dollar will trade at $1.315 by the end of the week, Chandler said.

To contact the reporter on this story: Bo Nielsen in Copenhagen at bnielsen4@bloomberg.net

Dollar May Extend Drop as U.S. Confidence Reduces Safety Demand

2009-04-29T04:44:00.000+07:00

(Bloomberg) -- The dollar may extend its decline against the euro as a jump in U.S. consumer confidence in April reduced demand for the relative safety of the greenback.

Mexico’s peso rose from the weakest level in almost four weeks yesterday on speculation the government will contain the swine flu outbreak and limit its impact on an already faltering economy. The dollar weakened before a report forecast to show U.S. gross domestic product shrank at a slower pace in the first quarter and the Federal Reserve’s decision on monetary policy.

“The U.S. economy is not falling as fast as last year, which is a good thing,” said Robert Blake, head of strategy for North America in Boston at State Street Global Markets LLC, with $11.3 trillion in assets under custody. “Institutional investors have unwound long dollar positions even though they haven’t gone outright short. The market lacks direction at the moment.” A long position is a bet an asset will appreciate.

The dollar traded at $1.3149 per euro at 6:05 a.m. in Tokyo, after falling 0.9 percent yesterday. The euro was at 126.78 yen, following a 0.5 percent gain. The U.S. currency was at 96.43 yen after falling 0.3 percent.

Mexico’s peso increased 1.6 percent to 13.80 per dollar yesterday after earlier declining to 14.1382, the weakest level since April 1, and plunging 5.1 percent on April 27.

Mexico City will close all 35,000 restaurants through May 5 to prevent the spread of the swine flu. As many as 152 people have died in Mexico from flu-related causes, and the number of worldwide cases of the virus confirmed by laboratory tests reached 73, officials said.

Spread of Flu

The spread of the swine flu beyond Mexico prompted the World Health Organization to increase its global pandemic alert to the highest since it adopted the warning system in 2005.

The dollar dropped yesterday against the euro on reduced haven demand as the New York-based Conference Board’s consumer confidence index climbed this month to 39.2, the highest level since November, from 26.9 in March. The gain in the index was the biggest since 2005.

“A slower rate of economic decline continues to play out,” said Andrew Busch, a global currency strategist at BMO Capital Markets in Chicago. “Risk is being put back on, and the euro rallied a bit.”

The U.S. economy probably contracted at an annual rate of 4.7 percent in the first quarter after shrinking 6.3 percent in the final three months of 2008, according to the median forecast of 71 economists surveyed by Bloomberg. The Commerce Department is due to release the report at 8:30 a.m. in Washington.

Fed’s Decision

The Fed will keep its target lending rate in a range of zero to 0.25 percent, according to a separate Bloomberg survey of 43 economists. Policy makers will announce the decision on borrowing costs and goals for purchases of Treasuries and mortgage securities at 2:15 p.m. in Washington.

European Central Bank policy makers may cut the 1.25 percent target lending rate at their next meeting on May 7 and signal they may pump additional money into the economy to push down borrowing costs.

“The ECB doesn’t like to shock and surprise,” said Steven Barrow, head of Group of 10 currency research in London at Standard Bank Plc. “We may get a buy the rumor, sell the fact response and see the market buy the euro when the ECB doesn’t do anything as negative as the market feared.”

The euro may decline to as low as 121.75 yen after breaking through a resistance level of 124.75 early yesterday, according to analysis of Fibonacci numbers, Societe Generale said in a research note.

The levels represent 50 percent and 38.2 percent retracements of a rally that started at 112.12 yen on Jan. 21 and ended at 124.98 on April 6, the bank said.

Currency Retracement

“We expect euro-yen to break below the Fibonacci retracement of 124.75, currently tested, which is the last major support on the way to the 121.75-80 region,” technical analysts including Hughes Naka in Paris wrote.

Support and resistance refer to the bottom and top boundaries of a trading range, where buy and sell orders are typically clustered. Fibonacci analysis is based on the theory that prices rise or fall by certain percentages after reaching a high or low.

To contact the reporter on this story: Ye Xie in New York at yxie6@bloomberg.net

Euro May Decline to 10-Week Low Against Yen: Technical Analysis

2009-04-29T04:43:00.000+07:00

(Bloomberg) -- The euro may decline to a 10-week low against the yen after falling below so-called support at 126.42, said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co., citing trading patterns.

Support at 126.42 yen represents the neckline of a so- called “head-and-shoulders” pattern, which was completed when the euro closed at 126.14 yen yesterday, Tokyo-based Soma said. A head and shoulders is formed when a currency makes three consecutive peaks, with the middle being the highest. The neckline is drawn across the base of the three peaks.

“The euro-yen has broken below the neckline of the head and shoulders, which means it’ll probably go down more,” Soma said. “The target is around 115.38 yen.”

Europe’s single currency dropped to 124.59 yen as of 7:39 a.m. in London from 126.14 yen in New York yesterday. It earlier reached 124.54 yen, the lowest level since March 12. The 115.38 yen level was last seen on Feb. 12, according to data compiled by Bloomberg.

In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index. Support is a level where buy orders may be clustered and resistance is where there may be sell orders.

To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net.

Yen Advances to Six-Week High as Swine Flu Spurs Safety Demand

2009-04-28T07:35:00.000+07:00

(Bloomberg) -- The yen rose to the strongest level in more than six weeks against the euro on speculation the spreading swine flu outbreak will increase demand for safety.

The Mexican peso slumped the most against the dollar in six months yesterday as the World Health Organization raised its pandemic alert to an unprecedented level, fueling concern the spread of the virus will deepen the global recession. The euro may fall for a second day against the dollar after European Central Bank member Ewald Nowotny said yesterday the bank stands “ready to use unconventional measures of quantitative easing” to improve the flow of credit.

“The spread of swine flu has sparked concern over global risk and strengthened risk aversion,” said Yousuke Hosokawa, a senior currency dealer in Tokyo at Chuo Mitsui Trust & Banking Co., a unit of Japan’s seventh-largest publicly traded bank. “Thus demand for the yen as a refuge will increase.”

The yen traded at 125.42 per euro as of 8:32 a.m. in Tokyo from 126.14 in New York yesterday. It touched 125.34, the strongest since March 12. The yen climbed to 96.30 per dollar from 96.77 yesterday, after reaching 96.28, the highest level since March 30. The dollar was at $1.3022 versus the euro from $1.3036.

Mexico’s currency was at 14.0390 versus dollar from 14.0505 yesterday and fell to 6.874 versus the yen from 6.860.

The Mexican peso fell yesterday against all of the other major currencies tracked by Bloomberg as the government closed schools until May 6 and shut public events to contain the swine flu. The currency dropped 5.1 percent yesterday against the greenback to the weakest level since April 1. It was the biggest decrease since Oct. 15.

Euro Falls

The euro declined yesterday for the first time in five days against the dollar before next week’s meeting of the European Central Bank, at which policy makers will announce whether they intend to take additional measures to push down borrowing costs.

Investors in the past week increased bets the ECB will reduce its 1.25 percent target lending rate at its May 7 meeting. The implied yield on the three-month Euribor interest-rate futures contract for June delivery fell to 1.295 percent yesterday from 1.325 percent a week earlier.

ECB President Jean-Claude Trichet said in New York yesterday that 2009 will be a “very bad year” for the euro region’s economy and a recovery will only emerge next year.

To contact the reporter on this story: Ye Xie in New York at yxie6@bloomberg.net; Yasuhiko Seki in Tokyo at yseki5@bloomberg.net

Yen Gains on Concern U.S. Slump Deepening, Swine Flu Spreading

2009-04-27T10:18:00.001+07:00

April 27 (Bloomberg) -- The yen rose for a fourth day against the dollar after Lawrence Summers said the U.S. economy will keep shrinking and as the spread of swine flu boosted demand for Japan’s currency as a refuge from the recession.

The yen strengthened against all 16 of the most-traded currencies after Summers, director of the White House National Economic Council, said yesterday the U.S. “economy will continue to decline,” with “sharp declines in employment for quite some time this year.” High-yielding currencies including those of Australia and New Zealand weakened as the worldwide number of cases of swine flu increased, leading to concern tourism will slump.

“The market is returning to pessimism-driven trading,” said Daisuke Uno, chief strategist in Tokyo at Sumitomo Mitsui Banking Corp., a unit of Japan’s third-largest bank. “This means that the yen may be bought.”

The yen rose to 96.87 per dollar as of 11:33 a.m. in Tokyo from 97.17 last week in New York. Japan’s currency advanced to 127.59 per euro from 128.66. The dollar climbed to $1.3171 per euro from $1.3242 last week.

Japan’s currency gained 1.6 percent to 69.15 per Australian dollar, and jumped 1.6 percent to 54.71 per New Zealand dollar.

The yen may strengthen to 90 per dollar by the middle of next month, Uno said.

Summers’ comments on “Fox News Sunday” came before a U.S. report in two days that economists say will show the world’s largest economy contracted 4.7 percent in the first quarter, after shrinking 6.3 percent in the final three months of 2008.

Swine Flu

Higher-yielding currencies declined after President Barack Obama’s administration declared a public health emergency and released stockpiles of medicine because of a growing number of swine flu cases in the U.S. and Mexico. New illnesses were also confirmed in Canada, and suspected in Brazil and Europe and New Zealand.

“The outbreak of swine flu sparked concerns about geopolitical risk and enhanced risk aversion,” said Kenichi Yumoto , head of foreign exchange sales at Societe Generale SA in Tokyo. “This led to buying of the yen.”

The Mexican peso fell for a second day against the dollar after Mexico requested the closure of bars, movie theaters and churches in the capital to fight swine flu. The peso fell 1.7 percent to 13.5772 per dollar today.

New Zealand’s dollar slid 1.1 percent to 56.57 U.S. cents on concern an outbreak of swine flu may curb tourism, which makes up 10 percent of the local economy. Australia’s currency declined 1.1 percent to 71.51 U.S. cents.

Reasons to Sell

“There are plenty of reasons to sell the New Zealand dollar and on the margin the swine flu news doesn’t help,” said Danica Hampton, a currency strategist at Bank of New Zealand Ltd. in Wellington. The currency will “struggle this week” and may fall toward 55 U.S. cents, she said.

The euro fell for a second day against the yen on concern the European Central Bank will lower its policy interest rate at its next policy meeting on May 7.

ECB President Jean-Claude Trichet may signal he will lower rates further when he speaks today at a conference on trends in global finance at the New York Federal Reserve Bank. Vitor Constancio, a member of the ECB governing council, speaks at a conference on corporate governance and consumer interests in Lisbon.

Quantitative Easing

“As well as the expected cut, there is also a chance of the ECB introducing so-called quantitative monetary easing,” said Kengo Suzuki, a Tokyo-based currency strategist at Shinko Securities Co. “This prospect may weigh on the euro.”

Quantitative easing is when a central bank buys public or private debt to add liquidity into the banking system.

ECB council member Nout Wellink said the bank should consider lowering the benchmark rate below 1 percent, Market News International reported yesterday, citing an interview.

“This is part of a discussion we should have in the governing council,” Wellink told the news agency in Washington. “Of course that should be discussed.”

Investors in the past week raised bets the ECB will reduce its 1.25 percent target lending rate at its May 7 meeting. The implied yield on the three-month Euribor interest-rate futures contract for June delivery fell to 1.295 percent from 1.325 percent a week ago.

Foreign Demand

Investors bullish on the U.S. economy say the dollar will strengthen as America recovers first from the global economic recession. Those who expect the longest contraction since the early 1980s to continue say the currency should appreciate as the haven from turmoil in world markets. Foreign investors bought a net $22 billion of U.S. financial assets in February, the Treasury Department said April 15.

“The equity-flow data have been dollar supportive almost any way you look at it,” said Robert Blake, head of strategy for North America in Boston at State Street Global Markets LLC, which has $11.3 trillion in assets under custody. When people flood into the equity market they’ve been buying the dollar as well.”

So far, the data show undiminished foreign demand for U.S. financial assets. Net purchases totaled $22 billion in February as China and Japan added to their holdings of U.S. government debt, the Treasury said. The Fed’s holdings of Treasuries on behalf of foreign central banks and other institutions rose 8.7 percent this year to $1.84 trillion.

More foreign money flowed into U.S. stock markets in the 20 business days ended April 15 than in 69 percent of the other 20- day periods going back to 1997, according to State Street data. The five-day flow was in the 77.6 percentile, compared with outflows in the last six months that were higher than 86.4 percent of past periods, the data showed.

To contact the reporter on this story: Ron Harui in Singapore at rharui@bloomberg.net; Yasuhiko Seki in Tokyo at yseki5@bloomberg.net.

Dollar Pares Gain Versus Yen on Drop in U.S. Home Resales

2009-04-23T21:33:00.000+07:00

(Bloomberg) -- The dollar pared its gain versus the yen after an industry report showed sales of existing homes fell in March more than economists forecast.

Swiss Franc Falls as Hildebrand Says SNB Wants to Limit Gains

2009-04-23T21:31:00.001+07:00

(Bloomberg) -- The Swiss franc fell against the euro after central bank Vice-Chairman Philipp Hildebrand said policy makers would continue to limit gains for the currency.

The Swiss National Bank will “resolutely” prevent an appreciation of the franc as long as the risk of deflation persists, Bilanz reported, citing an interview with Hildebrand. The Zurich-based SNB said on April 21 it raised its euro holdings by almost 30 percent in the first quarter.

“Prospects of intervention are pretty high whenever the SNB policy makers talk,” said Martin McMahon, currency strategist at Credit Suisse Group AG, the largest Swiss bank by market value. “There will be more verbal intervention from time to time and the question is ‘when will it be accompanied by actual intervention?’”

The franc fell 0.2 percent to 1.5159 per euro at 11:20 a.m. in Zurich, from 1.5133 yesterday. It slipped gained 0.3 percent to 1.1602 against the dollar, from 1.1636.

Switzerland’s currency lost about 2.4 percent against the euro since March 11, the day before the central bank announced it would act to weaken the franc. SNB Chairman Jean-Pierre Roth said last week it will extend the currency purchases as long as necessary to prevent an appreciation of the franc and ward off deflation.

To contact the reporter on this story: Anna Rascouet in London arascouet@bloomberg.net.

Indonesian Rupiah Drops on Global Growth Outlook; Bonds Fall

2009-04-23T21:31:00.000+07:00

(Bloomberg) -- Indonesia’s rupiah weakened for a fourth day, the longest stretch since November, on concern the global economic slump will be deeper than previously thought, damping demand for the nation’s assets. Bonds dropped.

The rupiah is set for its biggest weekly loss in almost three months as exchange data showed overseas investors sold $72 million more local shares than they bought this week. The International Monetary Fund said in a forecast released yesterday that the world economy will shrink 1.3 percent this year, compared with a January projection for 0.5 percent growth. The currency had advanced in the prior six weeks.

“The recent rally in the rupiah has been a little too stretched,” said Gundy Cahyadi, an economist at IDEAglobal in Singapore. “The stock market has been correcting. The IMF is announcing the recession could go longer. People are questioning their optimism in the past two to three weeks.”

The rupiah dropped 0.3 percent to 10,923 per dollar as of 5:21 p.m. in Jakarta, according to data compiled by Bloomberg. The currency has lost 1.8 percent this week. It reached 10,660 on April 16, the highest level since Dec. 18.

Growth in Indonesia, Southeast Asia’s largest economy, will slow to 2.5 percent this year, from 6.1 percent in 2008, according to the IMF report.

The Jakarta Composite Index of shares slid 1.4 percent today, extending its loss to 2.5 percent this week.

Bonds Decline

Non-deliverable forwards contracts signal traders are betting the rupiah will weaken 0.1 percent to 10,935 per dollar in a month, after indicating a rate of 10,975 yesterday. Forwards are agreements in which assets are bought and sold at current prices for delivery at a future specified time and date.

Five-year government bonds slipped for the third time this week on concern losses in the currency will erode the fixed payments from the securities.

“Bond prices were mirroring what’s going on with the currency,” said Wiling Bolung, head of treasury at ANZ Panin Bank in Jakarta.

The yield on the 11.25 percent security due May 2014 rose three basis points to 10.98 percent, according to closing prices from the Inter Dealer Market Association. The price declined 0.1296, or 1,296 rupiah per 1 million rupiah face amount, to 101.01.

Inflation will slow in April, central bank Senior Deputy Governor Miranda Goeltom told reporters in Jakarta today. Bank Indonesia cut borrowing costs for a fifth month on April 3 to 7.5 percent after inflation cooled to 7.9 percent in March, the slowest in a year.

To contact the reporter on this story: Lilian Karunungan in Singapore at lkarunungan@bloomberg.net.

Euro Gains Are Selling Opportunities, Dresdner-Commerzbank Says

2009-04-23T21:27:00.000+07:00

(Bloomberg) -- The euro’s gains against the dollar are unlikely to be sustained even if today’s index of services and manufacturing in the region shows an improvement, Dresdner Kleinwort-Commerzbank said.

“We see such upticks as selling opportunities,” a team of strategists including Michael Klawitter in Frankfurt wrote in a report today. “The return of risk appetite was no lasting argument in favour of the euro during the last couple of weeks. It hardly will be this time.

‘‘Some of yesterday’s euro-dollar strength was related to euro-pound-buying, a development which we do not expect repeating to the same extent in the days to come,’’ the strategists wrote.

To contact the reporter on this story: Justin Carrigan in London at jcarrigan@bloomberg.net

Yen Advances Against Dollar, Euro as Japan’s Export Slump Slows

2009-04-23T04:24:00.000+07:00

(Bloomberg) -- The yen rose against the dollar and euro after a report showed a slump in Japan’s exports slowed in March, adding to signs the worst of the recession may be over.

The pound fell against all of the other major currencies as Chancellor of the Exchequer Alistair Darling said the U.K. will borrow 269 billion pounds ($392 billion) more than previously forecast and increase income taxes as the worst slump since World War II saps revenue. The Australian dollar weakened against the greenback as annual inflation slowed, giving the central bank more room to lower interest rates.

“The focus was on yen outperformance,” said Shaun Osborne, chief currency strategist at TD Securities Inc. in Toronto. “The downward spiral of trade starts to abate here.”

The yen advanced 0.7 percent to 98.02 per dollar at 4 p.m. in New York, from 98.73 yesterday. The yen gained 0.3 percent to 127.39 per euro from 127.81 yesterday, when it reached 126.09, the strongest level since March 16. The dollar depreciated 0.4 percent to $1.2996 per euro from $1.2948. It earlier climbed to $1.2886, the strongest level since March 16.

Traders sold the pound for the euro, boosting demand for the 16-nation currency and pushing it up versus the dollar, according to Matthew Kassel, director of proprietary trading at ING Financial Markets LLC in New York.

Japan’s currency traded near a five-week high versus the euro after a government report showed the nation’s overseas shipments fell 45.6 percent last month from a year earlier, compared with February’s unprecedented 49.4 percent plunge. Economists in a Bloomberg survey predicted a 46.4 percent drop.

Weaker Pound

The pound fell 1.2 percent to $1.4495 as Darling told Parliament in London that the U.K. economy will shrink by 3.5 percent this year, more than twice the estimate in November. Against the euro, the pound dropped 1.7 percent to 89.72 pence.

The U.K.’s deficit will total 703 billion pounds during five fiscal years through April 2014, compared with 434 billion pounds forecast in November, Darling said in his annual budget statement to Parliament in London. This year’s shortfall of 175 billion pounds, or 12.4 percent of gross domestic product, is the biggest in the Group of 20 nations and more than the 12 percent expected in the U.S.

Darling increased the tax on people earning more than 150,000 pounds a year to 50 percent and withdrew breaks for pension contributions for that bracket.

Bullish No More

“I am turning 180 percent on my sterling-bullish call,” Neil Jones, head of European hedge fund sales in London at Mizuho Corporate Bank Ltd., wrote in a research note to clients. “Investment will exit the U.K. economy in search of lower tax regimes.”

The dollar fell yesterday against the euro after Treasury Secretary Timothy Geithner told a congressional panel the “vast majority” of U.S. banks have more capital than needed, reducing demand for the safety of the world’s main reserve currency.

Global policy makers may need to alter their strategies to combat the financial and economic crisis as conditions “evolve,” Geithner said in a speech today.

The Federal Reserve plans to release results of stress tests on banks on May 4. The tests are being used to determine whether the companies have enough capital to cover losses over the next two years should the recession worsen.

Worldwide losses tied to loans and securitized assets may reach $4.1 trillion by the end of 2010 as the recession and the credit crisis exact an increasing toll on financial institutions, the International Monetary Fund said yesterday.

IMF Outlook

The Washington-based IMF said in a new forecast released today that the world economy will shrink 1.3 percent this year, compared with its January projection of 0.5 percent growth. The lender predicted expansion of 1.9 percent next year instead of its earlier 3 percent projection.

“The IMF’s gloomy prognosis is an added factor helping to define the risk-appetite environment,” Steve Pearson, a London- based currency strategist at Bank of America-Merrill Lynch, wrote in a note today. “This is leaving foreign-exchange price action biased toward dollar and yen outperformance.”

Australia’s dollar weakened 0.6 percent to 70.74 U.S. cents and 1.2 percent to 69.39 yen after a report showed the nation’s consumer price index rose 2.5 percent in the first quarter from a year earlier, after gaining 3.7 percent in the fourth quarter.

“With inflation working lower, they would be able to keep interest rates at low levels for a prolonged period,” said Savanth Sebastian, an economist at Commonwealth Bank of Australia in Sydney. “We are penciling in at least one more rate cut.”

Canadian Dollar

The Canadian dollar dropped 0.2 percent to C$1.2387 versus the greenback before policy makers issue a report tomorrow that may pave the way for quantitative easing, in which a central bank prints money to buy debt assets and stimulate lending.

Investors should buy the Canadian dollar because speculation the nation’s central bank may debase the currency with quantitative easing is likely overblown, according to Bank of Tokyo-Mitsubishi UFJ Ltd.

“Given other quantitative-easing currency performances and given that quantitative easing in Canada is likely to be very mild, if introduced at all, we believe current U.S. dollar- Canadian dollar levels offer good selling opportunities for an eventual break below C$1.20,” Derek Halpenny, the bank’s London-based European head of global currency research, wrote today in a note to clients.

To contact the reporter on this story: Ye Xie in New York at yxie6@bloomberg.net

Pound Drops as U.K. Announces Record Debt Sales to Help Economy

2009-04-23T04:23:00.000+07:00

(Bloomberg) -- The pound dropped after the Treasury said it will sell a record amount of gilts this year as Prime Minister Gordon Brown attempts to lift the economy out of its worst recession since World War II.

The British currency slid versus the dollar, euro, yen and Swiss franc after the London-based Debt Management Office said it plans to raise 220 billion pounds ($319 billion) from gilt sales in the year through March 2010, higher than the 180 billion pounds forecast. Chancellor of the Exchequer Alistair Darling, who presented his budget to Parliament today, predicted a 3.5 percent contraction in the economy this year.

“The U.K. is mortgaged up to the hilt,” said Paul Day, chief market analyst at MIG Investments SA in Singapore. “Sterling is way off its lows against many currencies. The risk is we’ll take those lows out over the next couple of months.”

The pound fell to $1.4485 by 4:55 p.m. in London, from $1.4673 yesterday. It weakened to 89.80 pence per euro, from 88.25 pence.

The government will borrow 269 billion pounds ($392 billion) more than previously forecast to revive the economy, Darling said. The U.K.’s deficits will total 703 billion pounds during the five fiscal years through April 2014, up from the 434 billion pounds forecast in November.

The pound slid earlier today after a separate report from the International Labour Organization showed the number of Britons without work rose to 2.1 million in the three months through February, the most in 12 years. The jobless rate increased to 6.7 percent, the highest since October 1997, from 6.5 percent in the quarter through January.

The yield on the 10-year gilt rose 14 basis points to 3.44 percent. The 4.5 percent security due March 2019 fell 1.19, or 11.9 pounds per 1,000-pound face amount, to 108.79. Bond yields move inversely to prices.

To contact the reporter on this story: Gavin Finch in London at gfinch@bloomberg.net

Yen Rises on Concern U.S. Stress Tests May Show Crisis Not Over

2009-04-22T18:14:00.000+07:00

(Bloomberg) -- The yen rose on speculation stress tests on the largest U.S. banks will show additional loan losses, boosting the currency’s appeal as a refuge from the global financial crisis.

The Japanese currency also advanced after a government report showed a slump in the nation’s exports slowed in March, stemming a four-month streak of record declines and adding to signs the recession may be easing. The pound fell as data showed Britain’s deficit and unemployment increased before Chancellor of the Exchequer Alistair Darling delivers his budget.

“Across the board it’s still a very precarious situation,” said Geoffrey Yu, a currency strategist in London at UBS AG, the world’s second-largest foreign-exchange trader. “The stress tests are more trouble than they’re worth and people have second thoughts about jumping back into risk.”

The yen climbed to 126.74 per euro as of 6 a.m. in New York, from 127.81 yesterday, when it reached 126.09, the strongest level since March 16. Japan’s currency advanced to 97.88 per dollar, from 98.73, as investors reversed trades funded in the yen and the dollar to reduce risk.

The dollar was little changed at $1.2944 per euro. It will trade at $1.25 and 95 yen in three months, Yu said.

The U.S. government’s stress tests on the 19 largest U.S. banks are increasingly focusing on the quality of loans the lenders made after finding wide variations in underwriting standards, according to a regulatory official.

Risk Averse

“The IMF’s gloomy prognosis is an added factor helping to define the risk appetite environment,” Steve Pearson, a London- based currency strategist at Bank of America Securities-Merrill Lynch, wrote in a note today. “This is leaving foreign-exchange price action biased toward dollar and yen outperformance.”

The dollar fell against the euro yesterday after Treasury Secretary Timothy Geithner told a congressional panel that the “vast majority” of U.S. banks have more capital than needed. He also said there are signs of “thawing” in credit markets.

Japan’s currency also approached a five-week high versus the euro after a government report showed the nation’s overseas shipments fell 45.6 percent from a year earlier, compared with February’s unprecedented 49.4 percent plunge. Economists predicted a 46.4 percent drop.

‘Positive Influence’

“Improvement in terms of trade could have a positive influence on the Japanese economy,” said Susumu Kato, chief economists at Calyon Securities in Tokyo. “The yen will be traded in a stable manner.”

Australia’s dollar slid against the greenback and the yen after a report showed the nation’s inflation rate fell to an 18- month low, giving policy makers more room to cut interest rates. The Australian dollar weakened to 70.32 U.S. cents, from 71.14 cents yesterday, and dropped to 69.12 yen, from 70.24 yen.

Australia’s consumer price index rose 2.5 percent in the first quarter from a year earlier, after gaining 3.7 percent in the fourth quarter, the Bureau of Statistics said in Sydney.

Pound Drops

The British pound fell 0.8 percent to $1.4554. The U.K. budget shortfall may jump to 160 billion pounds ($232 billion), or 11 percent of gross domestic product, according to a survey of 24 economists conducted by the Treasury. Darling presents his figures at 12:30 p.m. in London.

U.K. unemployment rose 177,000 in the three months through February to 2.1 million, the most since Prime Minister Gordon Brown’s Labour Party came to power in 1997, according to the Office for National Statistics. The deficit almost tripled to 90 billion pounds in the fiscal year through March, the statistics office said.

The euro traded near the lowest level in more than a month against the dollar on concern disagreement is deepening among European Central Bank policy makers on measures needed to combat the recession.

“The anxiety about disparity on policy action among ECB policy makers is still strong,” said Ryohei Muramatsu, manager of Group Treasury Asia in Tokyo at Commerzbank AG, Germany’s second-largest lender. “This may continue to outweigh the impact of yesterday’s better-than-expected ZEW survey.”

The Canadian dollar fell 0.5 percent to C$1.2413 per U.S. dollar before the Bank of Canada publishes guidelines for possible quantitative easing tomorrow. The central bank cut its key interest rate to a record low of 0.25 percent yesterday, and said it plans to leave it there for more than a year.

To contact the reporter on this story: Bo Nielsen in Copenhagen at bnielsen4@bloomberg.net

Asian Currencies: Rupee, Won Advance as Risk Aversion Abates

2009-04-22T18:12:00.000+07:00

(Bloomberg) -- The Indian rupee and the South Korean won rose after Treasury Secretary Timothy Geithner said most U.S. banks have enough capital, helping address concerns that prompted investors to pull funds from emerging markets.

The rupee strengthened on speculation India’s economy will weather the global recession better than most developing nations. The won advanced as Vice Finance Minister Hur Kyung Wook said today South Korea’s stock and currency markets are “stable.” Japan’s export slump eased in March, ending a four-month run of record declines, according to a report released today.

“In general, Asian currencies are pretty stable,” said Thomas Harr, a senior currency strategist at Standard Chartered Plc in Singapore. “Risk appetite is still pretty high. The recession is probably slowing.”

The rupee gained 0.1 percent to 50.3925 per dollar as of 2:34 p.m. in Mumbai, according to data compiled by Bloomberg. The won climbed 0.1 percent to 1,348.10 in Seoul. The Korean currency has strengthened in each of the last six weeks and touched a three-month high of 1,298.05 on April 10. The rupiah rose 0.2 percent to 10,853 in Jakarta.

The Reserve Bank of India yesterday forecast the economy will grow 6 percent in the year that started April 1. Policy makers cut interest rates yesterday for the third time this year to spur spending and investment.

“The rupee should be on a stable-to-appreciating trend from here on,” Rahul Chadha, Hong Kong-based head of Indian equities at Mirae Asset Global Investment, said in an interview on Bloomberg Television. “India is one of the few trillion- dollar economies that will still grow at 5 percent. Foreign investors will find India a very attractive investment.” Mirae has about $40 billion of assets under management.

U.S. Stock Gains

The Kospi stock index climbed 1.4 percent to its highest close since October as overseas investors bought more Korean equities than they sold today. They turned net sellers of Korean shares yesterday, contributing to a drop in the won, after Bank of America Corp. set aside more money for bad loans. Geithner’s comments on U.S. bank finances helped the Standard & Poor’s 500 Index climb the most in a week.

“The Korea won is a touch stronger on the back of better equities in the U.S.” said Dwyfor Evans, a Hong Kong-based strategist at State Street Global Markets. “We’ve had five weeks of very strong equity performance that’s driven the emerging-market currencies stronger, but that’s been more hit- and-miss in the last few days.”

Credit Losses

Financial institutions worldwide have reported credit losses exceeding $1.3 trillion since a credit crisis began in mid-2007. Losses may reach $4.1 trillion by the end of 2010, the International Monetary Fund said in a report yesterday.

“Currently, the vast majority of banks have more capital than they need to be considered well capitalized by their regulators,” Geithner said yesterday in testimony to a U.S. congressional oversight panel.

The yen strengthened following the release of March trade figures. Japan’s Ministry of Finance said custom-cleared exports declined 45.6 percent from a year earlier, following a record drop of 49.4 percent in February.

The yen climbed to 98.26 per dollar in London from 98.73 yesterday in New York.

The Philippine currency fell to a seven-week low after the government today reported its biggest monthly budget deficit in at least 15 years. The shortfall swelled to 52.6 billion pesos ($1.1 billion) in March as slowing economic growth hurt state income.

The peso dropped 0.5 percent to 48.715 a dollar at the close in Manila, according to Tullett Prebon Plc. It earlier touched 48.725, the weakest since March 6.

Elsewhere, the Thai baht fell 0.1 percent to 35.59 a dollar. The Malaysian ringgit and the Singapore dollar were little changed at 3.6445 and S$1.5076, respectively. Taiwan’s dollar stayed at NT$33.86 and the Vietnamese dong traded at 17,775, from 17,781 yesterday.

To contact the reporters on this story: Lilian Karunungan in Singapore at at lkarunungan@bloomberg.net

Japan March Trade Surplus 11 Billion Yen

2009-04-22T11:50:00.000+07:00

(RTTNews) - Japan saw a merchandise trade surplus of 11 billion yen in March, the Ministry of Finance said on Wednesday - beating analyst expectations for a 10 billion yen surplus following the revised 82.1 billion yen surplus in February.

Imports were down 36.7 percent on year versus expectations for a 37.3 percent fall after the 43 percent contraction in the previous month. Exports dropped 45.6 percent on year versus the 46.6 percent decline that had been forecast following the 49.4 percent decline a month earlier.

Energy sources were a major factor for the decline in imports, the ministry said. Japan imported 18.2 million tons of crude oil in March, down 18.4 percent on year. The crude import bill for March was 88 billion yen, the data showed, down an annual 65 percent. Also, coal imports were 12.4 million tons, -16.6 percent on year, while naphtha and gasoline imports fell 22 percent on year and LNG imports came in at 5.8 million tons, down an annual 8.4 percent.

Seasonally adjusted, Japan posted a deficit of 97.1 billion yen versus expectations for a 250.7 billion yen shortfall following the revised 71.7 billion yen deficit in February.

Yen, Dollar Rise on Concern Stress Tests May Show More Losses

2009-04-22T11:36:00.000+07:00

(Bloomberg) -- The yen and the dollar rose on speculation that stress tests on the 19 largest U.S. banks will show additional losses on their loans, boosting demand for the two currencies as a refuge from the global financial crisis.

The yen also advanced after a government report showed Japan unexpectedly posted a trade surplus in March, reviving the allure of the Japanese currency as a shelter from the worldwide recession. Australia’s dollar weakened against the greenback and the yen after a report showed the inflation rate fell to an 18- month low, giving policy makers more room to cut interest rates.

“Investors remain averse to taking on risk amid lingering worries over the financial turmoil,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. “The yen and the dollar are being bought as ‘safe-haven’ currencies.”

The yen climbed to 127.12 per euro as of 12:30 p.m. in Tokyo from 127.81 in New York yesterday, when it reached 126.09, the highest level since March 16. Japan’s currency advanced to 98.31 against the dollar from 98.73.

The dollar rose to $1.2930 against the euro from $1.2948 in New York yesterday. It touched $1.2889 on April 20, the strongest since March 16. The U.S. currency advanced to $1.4648 versus the British pound from $1.4673.

Australia’s dollar declined to 70.61 U.S. cents from 71.14 cents in New York yesterday, and dropped to 69.43 yen from 70.24 yen. New Zealand’s dollar fell to 55.71 cents from 56.40 cents, and weakened to 54.76 yen from 55.66 yen.

Stress Tests

The yen rose versus all 16 most-active currencies after a regulatory official said the U.S. government’s stress tests are increasingly focusing on the quality of loans the banks made after finding wide variations in underwriting standards.

The remark provides insight into the April 24 release of the regulator’s methodology for the tests. The person also said the tests don’t amount to solvency judgments, noting that estimates of each bank’s losses over the coming two years won’t necessarily equal the amount of new capital it needs to raise.

The dollar typically strengthens in times of financial turmoil as investors take refuge in the greenback as the world’s reserve currency. The yen also gains as Japan’s trade surplus makes the currency attractive as it means the nation does not have to rely on overseas lenders.

The Dollar Index, used by the ICE to track the greenback against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, was little changed at 86.537.

Japan’s currency also advanced after the Ministry of Finance said custom-cleared exports declined 45.6 percent in March from a year earlier, following a record drop of 49.4 percent in February.

‘Positive Influence’

Japan’s gross domestic product may have contracted at an annual 10.9 percent pace in the first quarter, economists surveyed by Bloomberg predict, after shrinking at a 12.1 percent pace in the previous three months, the steepest drop since 1974.

Australia’s dollar fell toward a three-week low versus the dollar and the yen after the Bureau of Statistics said today annual inflation slowed, backing the case for the Reserve Bank of Australia to cut interest rates.

“With inflation working lower, they would be able to keep interest rates at low levels for a prolonged period of time,” said Savanth Sebastian, an economist at Commonwealth Bank of Australia in Sydney. “We are penciling in at least one more rate cut.”

The consumer price index in Australia rose 2.5 percent in the first quarter from a year earlier, after gaining 3.7 percent in the fourth quarter, the Bureau of Statistics said in Sydney today. The median estimate of 19 economists surveyed by Bloomberg was for a 2.8 percent gain.

To contact the reporters on this story: Yasuhiko Seki in Tokyo at yseki5@bloomberg.net; Ron Harui in Singapore at rharui@bloomberg.net.

The pound rebounded from its lowest level in almost three weeks against the dollar after results from Tesco Plc and Burberry Group Plc

2009-04-22T11:35:00.000+07:00

(Bloomberg) -- The South Korean won and the Indonesian rupiah rose after Treasury Secretary Timothy Geithner said the “vast majority” of U.S. banks have enough capital, helping address concerns that prompted investors to pull funds from emerging markets earlier in the week.

The won advanced as Vice Finance Minister Hur Kyung Wook said today South Korea’s stock and currency markets are “stable” and the economy is showing both positive and negative signs. The MSCI Asia-Pacific Index of shares gained after the Standard & Poor’s 500 Index climbed the most in a week. Japan’s export slump eased in March, ending a four-month run of record declines, according to a report released today.

“In general, Asian currencies are pretty stable and the stocks are slightly stronger,” said Thomas Harr, a senior currency strategist at Standard Chartered Plc in Singapore. “Risk appetite is still pretty high. The recession is probably slowing, not because we’re out of the recession. The Japanese data is in line with that.”

The won climbed 0.2 percent to 1,346.35 per dollar as of 11:54 a.m. in Seoul, according to data compiled by Bloomberg. The currency has strengthened in each of the last six weeks and touched a three-month high of 1,298.05 on April 10. The rupiah rose 0.3 percent to 10,840 in Jakarta. The Indonesian currency has advanced 6.6 percent this month.

The MSCI Asia-Pacific Index rose as much as 0.6 percent, following a 2.1 percent gain in the S&P 500.

Better Equities

The Kospi stock index climbed 1.1 percent, headed for its highest close since October. Overseas investors yesterday turned net sellers of Korean shares, contributing to a drop in the won, after Bank of America Corp. set aside more money for bad loans.

Japan Exports

The yen climbed to 98.37 per dollar in Tokyo from 98.73 yesterday in New York.

Elsewhere, Taiwan’s dollar and the Thai baht rose 0.1 percent to NT$33.82 and 35.53, respectively. The Malaysian ringgit advanced 0.1 percent to 3.6410, and the Singapore dollar was at S$1.5077 versus S$1.5085 yesterday. The Vietnamese dong slid 0.1 percent to 17,800.

To contact the reporters on this story: Lilian Karunungan in Singapore at at lkarunungan@bloomberg.net

Pound Advances as Tesco, Burberry Boost Outlook for Retailers

2009-04-22T11:33:00.000+07:00

(Bloomberg) -- The pound rebounded from its lowest level in almost three weeks against the dollar after results from Tesco Plc and Burberry Group Plc bolstered speculation the U.K. economic slump may be easing.

The British currency swung between gains and losses versus the euro after an industry report showed German investor confidence climbed to the highest level in almost two years in April, and stock markets fluctuated. Gilts declined after Bank of England policy maker Paul Fisher said its quantitative easing plan is “about the right size.”

“Things have stopped getting worse in the U.K. and in some cases are actually improving again,” said Neil Jones, head of European hedge fund sales in London at Mizuho Corporate Bank Ltd. “I’m positive on sterling. I think the U.K. economy will outperform its peers.”

The pound advanced to $1.4696 by 4:50 p.m. in London, from $1.4540 yesterday. It earlier fell to $1.4469, the weakest since April 2. The pound strengthened to 88.45 pence per euro, from 88.87 pence.

Tesco, Europe’s second-biggest retailer, said sales at U.K. stores open at least a year increased 3.4 percent in the six weeks since the end of February, quicker than the fourth quarter’s 2.7 percent gain. Burberry, Britain’s largest publicly traded luxury-goods company, reported revenue that beat analysts’ estimates.

Tesco rose 5 percent in London trading, with Burberry jumping 13 percent.

Fisher told Parliament’s Treasury Committee in London that the 75 billion-pound ($109 billion) amount committed thus far “looks to me to be calibrated reasonably well,” suggesting the central bank may not use all the funds available to it. The Treasury will announce record gilt issuance for the year through March 2010 tomorrow, according to a Bloomberg survey.

The decline in gilts pushed the yield on the 10-year bond 12 basis points higher to 3.33 percent. The 4.5 percent security due March 2019 fell 1.04, or 10.4 pounds per 1,000-pound face amount, to 109.79.

To contact the reporter on this story: Gavin Finch in London at gfinch@bloomberg.net

Crude overshadowed by signs of prolonged recession

2009-04-22T00:58:00.000+07:00

Jakarta, Financeroll.com - Minyak diperdagangan melemah karena tanda-tanda resesi AS akan berlanjut sampai semester kedua tahun ini, sehingga menurunkan permintaan terhadap bahan bakar mobil dan pabrik. Jakarta, Financeroll.com - Oil was little changed after falling on signs the U.S. recession will extend into the second half of the year, reducing fuel demand for cars and factories.

Oil dropped yesterday as an index of U.S. leading economic indicators fell more than forecast in March. The Conference Board gauge points to the direction of the economy over the next six months and slid 0.3 percent. The dollar traded near a five- week high versus the euro, reducing the appeal of commodities as an inflation hedge.

Oil demand won’t push up because there just hasn’t been any data supporting the idea that the economy has turned around. The dollar gains have also been a big driver.

Crude oil for May delivery was at $45.95 a barrel, up 7 cents. Brent crude oil for June settlement was at $49.98, up 12 cents, on London’s ICE Futures Europe exchange.

Wall Street drag Asian shares

2009-04-22T00:56:00.000+07:00

Jakarta, Financeroll.com - Asian stocks slumped, led by financial and mining companies, as higher loan-loss reserves at Bank of America Corp. and a drop in commodity prices derailed optimism the global economy is recovering. Orix Corp. slid 6.1 percent after Nomura Holdings Inc. downgraded the shares. BHP Billiton Ltd., the world’s largest mining company, lost 3.6 percent after oil and metals prices sank. Mitsubishi Corp. dropped 5.2 percent after the Nikkei newspaper said falling coal prices will erode profits.

Nikkei 225 tumbled 2.5 percent to 8,701.29, while S&P/ASX 200 Index slumped 2.7 percent. All markets open for trading declined.

Prospects for more bank losses spurred demand for the yen as an investment haven. The Japanese currency touched 97.66, a level not seen since March 31, compared with 98.89 at the close of stock trading in Tokyo yesterday.

Orix retreated 6.1 percent to 4,460 yen. Westpac Banking Corp. dropped 3.2 percent to A$19.61. BHP sank 3.6 percent to A$31.71. Crude oil for May delivery dived 8.8 percent to $45.88 a barrel in New York yesterday. Copper futures for July delivery slid 4.2 percent, the sharpest plunge since Feb. 17. Mitsubishi Corp. slumped 5.2 percent to 1,592 yen.

Euro Halts Three-Day Slide Versus Yen as Confidence Increases

2009-04-22T00:54:00.000+07:00

(Bloomberg) -- The euro halted a three-day slide against the yen after a report showed German investor confidence in April increased to the highest level in almost two years.

The euro also rebounded from a five-week low versus the dollar after the ZEW Center for European Economic Research in Mannheim, Germany, said its index of investor and analyst expectations turned positive for the first time in almost two years. Canada’s dollar touched a three-week low against its U.S. counterpart after the nation’s central bank unexpectedly cut its benchmark interest rate to a record-low 0.25 percent.

“We are seeing a reversal of a downward spiral in sentiment,” said Sebastien Galy, a currency strategist at BNP Paribas Securities SA in New York. “An improvement in the ZEW creates a positive loop. It’s consistent with signs of improvement globally.”

The euro rose 1 percent to 127.78 yen at 12:37 p.m. in New York, from 126.48 yen yesterday. It earlier touched 126.09, the lowest since March 16. Against the dollar, the 16-nation European currency rose 0.4 percent to $1.2968, from $1.2921 yesterday, when it touched $1.2889, the weakest since March 16. The U.S. currency rose to 98.55 yen, from 97.89 yen.

The Canadian currency touched C$1.2506, the lowest since April 2, after the central bank reduced the target rate by a quarter percentage point from 0.5 percent, and lowered its forecast for economic growth. The loonie rebounded to C$1.2366 as global stocks gained.

Central Bank Reductions

Thirteen of 25 economists surveyed by Bloomberg News forecast policy makers would leave Canada’s overnight rate unchanged, with the rest calling for a cut to 0.25 percent.

Sweden’s krona gained 1.6 percent to 11.06 per euro after the Riksbank cut the nation’s benchmark interest rate by half a percentage point to 0.5 percent and refrained from buying bonds to revive the economy. Twelve out of 21 economists in a Bloomberg survey forecast the reduction while the rest predicted a bigger cut.

“The markets had definitely priced a more dovish outcome for the meeting,” said Carl Hammer, a senior global macroeconomic analyst in Stockholm at SEB AB.

The euro advanced against the dollar after the ZEW index rose to 13, from minus 3.5 in March. That’s the highest level since June 2007. Economists expected a gain to 2, according to the median of 35 forecasts in a Bloomberg News survey.

“The result would need to be treated with caution,” Geoffrey Yu, a currency strategist in London at UBS AG, wrote in a note to clients today. “The euro is continuing to suffer from risk aversion and expectations of a major change in ECB policy, largely imposed on the central bank by deteriorating internal and external conditions.”

‘Undermine the Euro’

The 16-nation European currency has lost 5 percent against the dollar in the past month on concern European Central Bank policy makers will be struggling to come up with new measures to combat the recession. The ECB next meets May 7.

“There’s a good chance they will disclose the purchase of corporate bonds denominated in euros,” said Michael Woolfolk, a New York-based senior currency strategist at Bank of New York Mellon, said in an interview on Bloomberg Television in Hong Kong. “Such move would likely undermine the euro, and we could see a test around the $1.25 level before the end of May.”

Australia’s dollar rose 2 percent to 71.10 U.S. cents. The currency tumbled as much as 3.8 percent to 69.54 cents yesterday, the lowest since April. 1, on renewed concern that banks will suffer more credit losses. The New Zealand’s dollar advanced 2 percent to 56.34 cents, after losing 2.7 percent yesterday in its biggest decline since Feb. 10.

The two currencies have gained more than 10 percent in the past two months on signs the global economic slump may be slowing.

Banking Losses

Worldwide losses tied to rotten loans and securitized assets may reach $4.1 trillion by the end of 2010 as the recession and credit crisis exact a higher toll on financial institutions, the International Monetary Fund said today.

“We had a huge recovery in the dollar yesterday so there’s bound to be a little bit of consolidation,” said Richard Franulovich, a senior currency strategist at Westpac Banking Corp. in New York. “You are being afforded a free opportunity here to buy your dollars. You’ve had a pretty serious turning point in growth assets.”

The Federal Reserve plans to release results of “stress test” on banks May 4. The tests are being used to determine whether the companies have enough capital to cover losses over the next two years should the recession worsen. Treasury Secretary Timothy Geithner told a congressional panel today that the “vast majority” of U.S. banks have more capital than needed.

‘Risk Capitulation Trade’

“We could be at the start of a larger risk capitulation trade over the next few weeks,” said Brian Dolan, chief currency strategist at FOREX.com, a unit of online currency trading firm Gain Capital Group in Bedminster, New Jersey. “The banks have no clothes and they’re about to be exposed.”

The yen snapped three days of gains against the euro and the dollar before a government report tomorrow that may show Japan had a trade deficit of 27 billion yen ($275 million) in March, according to a Bloomberg News survey of economists.

“There’s a sense the yen has been overbought,” said Toshihiko Sakai, head of trading for foreign exchange and financial products in Tokyo at Mitsubishi UFJ Trust & Banking Corp., a unit of Japan’s largest bank. “Market participants are probably unwinding long yen positions.” A long position is a bet an asset will gain.

To contact the reporters on this story: Ye Xie in New York at yxie6@bloomberg.net; Oliver Biggadike in New York at obiggadike@bloomberg.net

Pound Decline Against Euro May Accelerate: Technical Analysis

2009-04-22T00:53:00.000+07:00

(Bloomberg) -- The pound’s decline against the euro may accelerate, according to at least three technical indicators.

Parabolic Systems, which traders use to track the strength of a trend, switched to a sell sign for the British currency today. The Williams %R showed the pound moved back from a so- called overbought position for the first time since March 31. The moving average convergence/divergence, or MACD, indicator suggested the pound’s rising trend is weakening.

“Sterling in general looks very, very wobbly,” said Paul Day, chief market analyst at MIG Investments SA in Singapore. “The market is taking a bit of risk off the table.”

The pound fell 0.2 percent to 89.07 pence per euro as of 12:08 p.m. in London, after weakening 0.8 percent yesterday. Day recommended buying the euro at 88.70 pence, predicting the 16-nation currency may strengthen to 93 pence.

The Parabolic Systems tool was the most profitable among eight in the past six months, returning more than 20 percent, according to data compiled by Bloomberg. Williams %R gained 5 percent, while the MACD indicator returned almost 16 percent.

To contact the reporter on this story: Daniel Tilles in London at dtilles@bloomberg.net

Pound Advances as Tesco, Burberry Boost Outlook for Retailers

2009-04-22T00:52:00.000+07:00

The pound advanced to $1.4696 by 4:50 p.m. in London, from $1.4540 yesterday. It earlier fell to $1.4469, the weakest since April 2. The pound strengthened to 88.45 pence per euro, from 88.87 pence.

Tesco rose 5 percent in London trading, with Burberry jumping 13 percent.

To contact the reporter on this story: Gavin Finch in London at gfinch@bloomberg.net

Wall Street's techinical correction.

2009-04-21T05:13:00.000+07:00

Financeroll.com -- U.S. stocks slid more than 3 percent on Monday for technical correction and after weak results from Bank of America reignited concerns over the state of the banking industry and the economy.

Wall Street's tumble was broad-based and follows a six-week winning streak, the longest for the S&P 500 since 2007, with the Dow scoring its biggest gain over the period since 1938.

Dow component Bank of America shares plunged 24.3 percent to $8.02 despite reporting a rise in profits. Bank of America's earnings report raised questions about the sustainability of recent better-than-expected results from banks after the company said its credit quality deteriorated markedly.

The Dow Jones industrial average dropped 289.60 points, or 3.56 percent, to 7,841.73. The Standard & Poor's 500 Index tumbled 37.21 points, or 4.28 percent, to 832.39. The Nasdaq Composite Index fell 64.86 points, or 3.88 percent, to 1,608.21.(RTR)