Feb. 1 -- New Zealand commodity export prices fell for the first time in three months in local currency terms in January amid a decline in returns for dairy products and a gain in the nation’s dollar.
Prices in local dollars fell 1.2 percent from December, according to an index calculated by ANZ National Bank Ltd. New Zealand’s dollar rose to a two-month high during January while dairy prices fell in world markets for the first time in seven months, the Wellington-based bank said in a statement.
Milk powder prices dropped in January for the first time since July, Fonterra Cooperative Group Ltd., the world’s largest dairy exporter, said on Jan. 6, citing the results of its monthly auction. Demand for powder has eased as companies have rebuilt inventories, Auckland-based Fonterra said.
Dairy prices fell 2 percent on world markets in January, ANZ said. After adjustment into New Zealand dollars, the price declined 4.1 percent.
Seafood, fruit and vegetable prices also dropped last month, the bank said. In the case of seafood, the currency’s gain wiped out a 2.5 percent jump in world prices.
From a year earlier, prices in the local currency have gained 5 percent, today’s report showed. Still, prices on world markets have surged 37 percent, and the New Zealand dollar’s gains have all but wiped out those benefits.
Sunday, January 31, 2010
Thursday, January 21, 2010
WORLD FOREX: Euro Hits 5-Month Low Vs Dollar On China Data
TOKYO (Dow Jones)--The euro fell to a fresh five-month low against the dollar in Asia Thursday after China's strong economic data heightened speculation Beijing may take further steps to cool its economy, possibly weighing on global equities, commodities and other risk-sensitive assets like the common currency.
Short-term players sold the euro after data showed China's gross domestic product expanded 8.7% in 2009, beating market expectations for 8.5% growth. Separate data showed the country's consumer price index was up 1.9% from a year earlier in December, exceeding expectations for a 1.7% rise and underscoring inflation concerns.
The selling drove the euro down to $1.4067, its lowest level since August 17 last year. Concern that Chinese authorities may take the most recent data as a cue to tighten monetary policy further could continue to weigh on the euro and other commodity-linked currencies like the Australian dollar, dealers said. Thursday's indicators came a day after China's banking regulator said it will rein in new lending this year.
"The China data were strong, so people are now even more anxious over when the authorities might again try to apply the brakes on the economy," said Yasuo Nakayama, manager at Shinkin Central Bank. The figures "put even more downward pressure on the euro," Nakayama added.
At 0450 GMT, the euro stood at $1.4093, below its level late Wednesday in New York at $1.4102. Due to euro's fall, the ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies including the common currency, was up at 78.445 compared to 78.369.
The Chinese currency itself provided news to market players.
Japan's Ministry of Finance issued a formal denial Thursday after media reports said that Finance Minister Naoto Kan had asked his Canadian counterpart Jim Flaherty to raise the issue of China's currency at an upcoming Group of Seven meeting.
Players are now focused on more U.S. corporate earnings statements, dealers said.
"If there are any negative surprises, share markets could head down, and in such a case the euro could easily fall below $1.4000," said Hiroshi Maeba, executive director of foreign exchange trading at Nomura Securities.
Meanwhile, the dollar rose against the yen due to buying by short-term players in Asia. Mild rises in the morning session triggered stop-loss buying orders at Y91.50, sending the unit to an intraday high of Y91.67. At 0450 GMT, it traded hands at Y91.57.
The dollar's rise helped the euro erase earlier losses against the yen on the China data. After touching a low of Y128.52 in the morning session, the common currency stood at Y129.10 compared to Y128.69 late Wednesday in New York.
Short-term players sold the euro after data showed China's gross domestic product expanded 8.7% in 2009, beating market expectations for 8.5% growth. Separate data showed the country's consumer price index was up 1.9% from a year earlier in December, exceeding expectations for a 1.7% rise and underscoring inflation concerns.
The selling drove the euro down to $1.4067, its lowest level since August 17 last year. Concern that Chinese authorities may take the most recent data as a cue to tighten monetary policy further could continue to weigh on the euro and other commodity-linked currencies like the Australian dollar, dealers said. Thursday's indicators came a day after China's banking regulator said it will rein in new lending this year.
"The China data were strong, so people are now even more anxious over when the authorities might again try to apply the brakes on the economy," said Yasuo Nakayama, manager at Shinkin Central Bank. The figures "put even more downward pressure on the euro," Nakayama added.
At 0450 GMT, the euro stood at $1.4093, below its level late Wednesday in New York at $1.4102. Due to euro's fall, the ICE Dollar Index, which tracks the greenback against a trade-weighted basket of currencies including the common currency, was up at 78.445 compared to 78.369.
The Chinese currency itself provided news to market players.
Japan's Ministry of Finance issued a formal denial Thursday after media reports said that Finance Minister Naoto Kan had asked his Canadian counterpart Jim Flaherty to raise the issue of China's currency at an upcoming Group of Seven meeting.
Players are now focused on more U.S. corporate earnings statements, dealers said.
"If there are any negative surprises, share markets could head down, and in such a case the euro could easily fall below $1.4000," said Hiroshi Maeba, executive director of foreign exchange trading at Nomura Securities.
Meanwhile, the dollar rose against the yen due to buying by short-term players in Asia. Mild rises in the morning session triggered stop-loss buying orders at Y91.50, sending the unit to an intraday high of Y91.67. At 0450 GMT, it traded hands at Y91.57.
The dollar's rise helped the euro erase earlier losses against the yen on the China data. After touching a low of Y128.52 in the morning session, the common currency stood at Y129.10 compared to Y128.69 late Wednesday in New York.
Tuesday, January 19, 2010
RBI permits currency futures in euro, pound, yen
Currently, persons resident in India are permitted only to trade in US Dollar (USD) -INR currency futures contracts in recognized stock exchanges.
It has been decided to permit the recognized stock exchanges to offer currency futures contracts in the currency pairs of Euro-INR, Japanese Yen (JPY)-INR and Pound Sterling (GBP)-INR, in addition to the USD-INR contracts, with immediate effect.
This has been done to facilitate direct hedging of currency risk in other currency pairs.
The move was widely expected following the banking regulator’s announcement of the need for more exchange-traded currency futures during the second quarter review of monetary policy in October last year.
The USD-INR futures are currently traded on three recognised exchanges, the National Stock Exchange (NSE), MCX Stock Exchange and the Bombay Stock Exchange (BSE). However, the currency derivative is liquid only on the first two bourses.
It has been decided to permit the recognized stock exchanges to offer currency futures contracts in the currency pairs of Euro-INR, Japanese Yen (JPY)-INR and Pound Sterling (GBP)-INR, in addition to the USD-INR contracts, with immediate effect.
This has been done to facilitate direct hedging of currency risk in other currency pairs.
The move was widely expected following the banking regulator’s announcement of the need for more exchange-traded currency futures during the second quarter review of monetary policy in October last year.
The USD-INR futures are currently traded on three recognised exchanges, the National Stock Exchange (NSE), MCX Stock Exchange and the Bombay Stock Exchange (BSE). However, the currency derivative is liquid only on the first two bourses.
Euro currency exchange still weak
The euro's presence in currency exchange markets is still suffering from Greece's weak fiscal policy.
Greece's troubled economy is continuing to pull down the single European currency, which dropped to a value of less than 87 pence for one euro at 10:00GMT today (January 18th).
The currency fell against nearly every major world currency and remained at a four-month low against sterling.
Gains in sterling have widely been attributed to its positive comparison against the poor euro performance.
Michael Hewson at CMC Markets told Reuters: "It is symptomatic of the problems in the euro zone that sterling is performing better."
Greece remains under political criticism from other European countries as it struggles to take control of its public finances.
The country's budget deficit has reached 12.7 percent, twice that of the average of the other 15 countries which operate euro as their currency.
Greece's troubled economy is continuing to pull down the single European currency, which dropped to a value of less than 87 pence for one euro at 10:00GMT today (January 18th).
The currency fell against nearly every major world currency and remained at a four-month low against sterling.
Gains in sterling have widely been attributed to its positive comparison against the poor euro performance.
Michael Hewson at CMC Markets told Reuters: "It is symptomatic of the problems in the euro zone that sterling is performing better."
Greece remains under political criticism from other European countries as it struggles to take control of its public finances.
The country's budget deficit has reached 12.7 percent, twice that of the average of the other 15 countries which operate euro as their currency.
Thursday, January 14, 2010
Chavez’s Anti-Dollar Currency to Debut at $1.25, Nacional Says
Jan. 15 -- A regional currency for trade between members of the Alba trade bloc, led by Venezuelan President Hugo Chavez, will first be used this week for a shipment of rice from Venezuela to Cuba, daily El Nacional reported.
Each sucre, as the currency is known, will be worth $1.25, the Caracas-based newspaper said, citing Venezuelan Finance Minister Ali Rodriguez. The accounting unit meant to reduce dependency on the dollar in commercial transactions will not circulate as cash.
Alba was created as an alternative to the U.S.-backed Free Trade Area of the Americas. It is made up of nine countries including Bolivia, Ecuador, Cuba and Nicaragua.
Each sucre, as the currency is known, will be worth $1.25, the Caracas-based newspaper said, citing Venezuelan Finance Minister Ali Rodriguez. The accounting unit meant to reduce dependency on the dollar in commercial transactions will not circulate as cash.
Alba was created as an alternative to the U.S.-backed Free Trade Area of the Americas. It is made up of nine countries including Bolivia, Ecuador, Cuba and Nicaragua.
Yen Drops as Australian Jobs Beat Forecasts and Stocks Advance
Jan. 14 -- The yen weakened against higher- yielding currencies for a second day after an Australian employment report beat analysts’ forecasts and stocks rose in Asia and Europe, boosting demand for riskier assets.
The yen fell versus all 16 of its most-traded peers, and dropping the most against Australia’s dollar, as the MSCI World Index of stocks advanced for a second day. The euro rose against the yen before a meeting of the European Central Bank at which policy makers are likely to keep interest rates unchanged.
“With risk back on, the yen has room to fall,” said Dag Muller, a foreign-exchange analyst in Stockholm with SEB AB, Sweden’s third-biggest bank.
The yen weakened to 85.39 per Australian dollar as of 6:42 a.m. in New York, from 84.45 yesterday. It depreciated to 133.16 per euro, from 132.59, and to 91.85 per dollar, from 91.37. The U.S. currency was at $1.4497 per euro, from $1.4510.
The ECB will leave its main refinancing rate at 1 percent following a meeting today, according to all of the 51 economists in a Bloomberg survey. The decision is scheduled for release at 1:45 p.m. in Frankfurt and central bank President Jean-Claude Trichet will address reporters 45 minutes later.
“The ECB is likely to leave rates and its non-standard measures unchanged,” Michael Hart, a currency strategist for Citigroup Inc. in London, wrote in a note today. “Its language is likely to remain dovish.”
Trichet Concern
The common currency erased a gain versus the dollar on concern Trichet will say the ECB won’t help members with fiscal problems. Greek Finance Minister George Papaconstantinou said today it’s difficult to convince investors about the health of the country’s finances at the moment.
“We could hear some harsh words from Trichet suggesting that the ECB isn’t going to bail out individual governments that have been fiscally irresponsible,” said Ian Stannard, a currency strategist with BNP Paribas SA in London. “Expect the euro to come under pressure.”
The Greek government struggles to rein in a budget deficit that’s still more than four times the European Union’s 3 percent limit of gross domestic product. Trichet said on Dec. 11 that Greece must take “courageous action” on its own.
Australia’s dollar strengthened against all 16 of its most- traded counterparts tracked by Bloomberg after the nation’s statistics bureau said the number of people employed rose 35,200 in December from the previous month. The median estimate of economists surveyed by Bloomberg was for an increase of 10,000. The jobless rate fell to 5.5 percent from a revised 5.6 percent.
‘Strong Data’
“Strong data in Australia are bolstering confidence for another rate increase,” said Daisuke Karakama, a market economist in Tokyo at Mizuho Corporate Bank Ltd., Japan’s second-largest publicly traded lender.
The odds that the Reserve Bank of Australia will raise its target rate by 25 basis points at its next meeting on Feb. 2 increased to 76 percent, from 60 percent yesterday, according to a Credit Suisse AG index. The MSCI World Index of global stocks rose 0.4 percent.
The yen also weakened after Japanese reports showed producer prices fell for a 12th month and machine orders unexpectedly declined, adding to speculation the government will take more measures to combat deflation and revive growth.
The costs companies pay for energy and unfinished goods tumbled 3.9 percent in December from a year earlier, the Bank of Japan said in Tokyo. Machine orders, an indicator of business investment in three to six months, slid 11.3 percent in November, the Cabinet Office said.
“The basic scenario is for the government to implement monetary easing and fiscal policies to fight deflation,” said Hideki Amikura, deputy general manager of foreign exchange at Nomura Trust & Banking Co., a unit of Japan’s largest brokerage. “The trend for yen weakness is likely to remain unchanged.”
Fed’s Dudley
New York Federal Reserve Bank President William Dudley said U.S. rates may remain “low” for at least six months and possibly two years, according to the transcript of an interview with PBS Television’s Nightly Business Report.
Futures trading in Chicago yesterday showed a 34 percent chance the Fed will raise its target lending rate by at least a quarter-percentage point by its June meeting, down from 41 percent odds a week earlier.
Commodity currencies like the Australian dollar also gained after Zheng Xiaosong, director general of the international department at China’s Ministry of Finance, said ending global stimulus programs too early may hurt the recovery.
Chinese Move
China’s central bank on Jan. 12 unexpectedly raised the proportion of deposits banks must set aside as reserves by half a percentage point starting Jan. 18.
“Zheng’s comments aim to ease concerns about China’s early tightening,” said Yoh Nihei, trading group manager at Tokai Tokyo Securities Co. in Tokyo. “The bias is for commodity currencies to be bought.”
Japanese Finance Minister Naoto Kan said he’s prepared to address China’s currency at a Group of Seven meeting next month, and signaled the Bank of Japan has scope for further action to aid the economy.
“Some nations might bring up the issue of the yuan,” Kan, who took his post last week, told reporters in Tokyo today. “I will listen carefully and express opinions if necessary, as the discussion may have a great impact on Japan’s economy.”
The yen fell versus all 16 of its most-traded peers, and dropping the most against Australia’s dollar, as the MSCI World Index of stocks advanced for a second day. The euro rose against the yen before a meeting of the European Central Bank at which policy makers are likely to keep interest rates unchanged.
“With risk back on, the yen has room to fall,” said Dag Muller, a foreign-exchange analyst in Stockholm with SEB AB, Sweden’s third-biggest bank.
The yen weakened to 85.39 per Australian dollar as of 6:42 a.m. in New York, from 84.45 yesterday. It depreciated to 133.16 per euro, from 132.59, and to 91.85 per dollar, from 91.37. The U.S. currency was at $1.4497 per euro, from $1.4510.
The ECB will leave its main refinancing rate at 1 percent following a meeting today, according to all of the 51 economists in a Bloomberg survey. The decision is scheduled for release at 1:45 p.m. in Frankfurt and central bank President Jean-Claude Trichet will address reporters 45 minutes later.
“The ECB is likely to leave rates and its non-standard measures unchanged,” Michael Hart, a currency strategist for Citigroup Inc. in London, wrote in a note today. “Its language is likely to remain dovish.”
Trichet Concern
The common currency erased a gain versus the dollar on concern Trichet will say the ECB won’t help members with fiscal problems. Greek Finance Minister George Papaconstantinou said today it’s difficult to convince investors about the health of the country’s finances at the moment.
“We could hear some harsh words from Trichet suggesting that the ECB isn’t going to bail out individual governments that have been fiscally irresponsible,” said Ian Stannard, a currency strategist with BNP Paribas SA in London. “Expect the euro to come under pressure.”
The Greek government struggles to rein in a budget deficit that’s still more than four times the European Union’s 3 percent limit of gross domestic product. Trichet said on Dec. 11 that Greece must take “courageous action” on its own.
Australia’s dollar strengthened against all 16 of its most- traded counterparts tracked by Bloomberg after the nation’s statistics bureau said the number of people employed rose 35,200 in December from the previous month. The median estimate of economists surveyed by Bloomberg was for an increase of 10,000. The jobless rate fell to 5.5 percent from a revised 5.6 percent.
‘Strong Data’
“Strong data in Australia are bolstering confidence for another rate increase,” said Daisuke Karakama, a market economist in Tokyo at Mizuho Corporate Bank Ltd., Japan’s second-largest publicly traded lender.
The odds that the Reserve Bank of Australia will raise its target rate by 25 basis points at its next meeting on Feb. 2 increased to 76 percent, from 60 percent yesterday, according to a Credit Suisse AG index. The MSCI World Index of global stocks rose 0.4 percent.
The yen also weakened after Japanese reports showed producer prices fell for a 12th month and machine orders unexpectedly declined, adding to speculation the government will take more measures to combat deflation and revive growth.
The costs companies pay for energy and unfinished goods tumbled 3.9 percent in December from a year earlier, the Bank of Japan said in Tokyo. Machine orders, an indicator of business investment in three to six months, slid 11.3 percent in November, the Cabinet Office said.
“The basic scenario is for the government to implement monetary easing and fiscal policies to fight deflation,” said Hideki Amikura, deputy general manager of foreign exchange at Nomura Trust & Banking Co., a unit of Japan’s largest brokerage. “The trend for yen weakness is likely to remain unchanged.”
Fed’s Dudley
New York Federal Reserve Bank President William Dudley said U.S. rates may remain “low” for at least six months and possibly two years, according to the transcript of an interview with PBS Television’s Nightly Business Report.
Futures trading in Chicago yesterday showed a 34 percent chance the Fed will raise its target lending rate by at least a quarter-percentage point by its June meeting, down from 41 percent odds a week earlier.
Commodity currencies like the Australian dollar also gained after Zheng Xiaosong, director general of the international department at China’s Ministry of Finance, said ending global stimulus programs too early may hurt the recovery.
Chinese Move
China’s central bank on Jan. 12 unexpectedly raised the proportion of deposits banks must set aside as reserves by half a percentage point starting Jan. 18.
“Zheng’s comments aim to ease concerns about China’s early tightening,” said Yoh Nihei, trading group manager at Tokai Tokyo Securities Co. in Tokyo. “The bias is for commodity currencies to be bought.”
Japanese Finance Minister Naoto Kan said he’s prepared to address China’s currency at a Group of Seven meeting next month, and signaled the Bank of Japan has scope for further action to aid the economy.
“Some nations might bring up the issue of the yuan,” Kan, who took his post last week, told reporters in Tokyo today. “I will listen carefully and express opinions if necessary, as the discussion may have a great impact on Japan’s economy.”
Tuesday, January 12, 2010
Canadian Currency Weakens as Oil Falls, Nation Posts Trade Gap
Jan. 12 -- Canada’s dollar fell the most in almost two weeks as commodities tumbled and the nation unexpectedly posted a trade deficit, spurring speculation the economic recovery may not be as robust as investors anticipated.
The currency, which touched an almost three-month high yesterday, pared its gain for January to 1.3 percent after rising 16 percent last year. Crude oil, Canada’s biggest export, dropped as China moved to curb bank lending. The trade deficit in November was C$344 million ($333 million), a government report showed, compared with a median forecast for a C$500 million surplus in a Bloomberg survey of economists.
“If we’d seen this trade data in any other situation the reaction in the market would have been more muted, but after the good rally we’ve seen, the shorter-term players used it to lock in profits,” said Matthew Strauss, a senior currency strategist in Toronto at Royal Bank of Canada, the nation’s biggest lender.
The Canadian dollar, nicknamed the loonie, depreciated 0.6 percent to C$1.0396 per U.S. dollar at 4:21 p.m. in Toronto, from C$1.0335 yesterday, when it reached C$1.0253, the strongest since Oct. 15. The loonie weakened today as much as 0.8 percent, the most on an intraday basis since Dec. 30. One Canadian dollar buys 96.20 U.S. cents.
Government bonds rose, driving down the yield on Canada’s benchmark 10-year note as much as six basis points, or 0.06 percentage point, to 3.55 percent, the lowest level in three weeks. The price of the 3.75 percent note due in June 2019 gained 40 cents to C$101.54.
‘Risk Aversion’
The loonie fell versus 12 of its 16 most-traded counterparts tracked by Bloomberg, while the U.S. dollar rose against 14.
The yen, the No. 1 performer, climbed 1.8 percent to 87.49 versus the Canadian dollar as China’s central bank said it will raise reserve requirements for the nation’s banks. That increased the likelihood it may increase its benchmark interest rate, which reduced demand for higher-yielding assets.
“With China raising rates, risk aversion really played a factor today,” said Steve Butler, director of foreign-exchange trading in Toronto at Bank of Nova Scotia.
Crude oil for February delivery tumbled 2.4 percent to $80.54 a barrel on the New York Mercantile Exchange. Copper for March delivery plunged as much as 4 percent to $3.305 a pound on the Comex division of the New York Mercantile Exchange. Gold for immediate delivery dropped 2.2 percent to $1,126.10 an ounce after touching $1,161.80 yesterday, the highest since Dec. 8.
Raw materials including oil, copper and gold account for half of Canada’s export revenue.
Strengthened Too Much
The Standard & Poor’s 500 Index dropped 0.9 percent.
“The Canadian dollar strengthened beyond where I think we should have last week,” said Shane Enright, a currency strategist in Toronto at Canadian Imperial Bank of Commerce.
The loonie gained 2.2 percent last week, the most since the five days ended Nov. 13. Its high for yesterday approached the closest it has come to parity with the U.S. dollar, C$1.0207 on Oct. 15, since it last traded on a one-for-one basis with the greenback in July 2008.
The Canadian dollar will reach parity in the next two to three months, RBC’s Strauss predicted.
The currency will weaken to C$1.06 by the end of 2010, according to the median forecast in a Bloomberg survey of 29 analysts and economists.
Rates and Housing
Bank of Canada adviser David Wolf in Ottawa yesterday indicated policy makers won’t soon raise interest rates to cool the nation’s housing market.
The lowest mortgage rates since the Korean War helped fuel a 67 percent increase in existing home sales in November from their January 2009 low. The Bank of Canada cut its benchmark lending rate to 0.25 percent in April and has committed to keeping it there through June unless the inflation outlook shifts to aid a recovery.
“If the bank were to raise interest rates to cool the housing market now -- when inflation is expected to remain below target for the next year and a half -- we would, in essence, be dousing the entire Canadian economy with cold water, just as it emerges from recession,” Wolf said yesterday in Edmonton, Alberta.
Canada’s new-housing price index rose 0.4 percent in November from October, Statistics Canada said today in Ottawa.
Traders trimmed bets on future interest rate increases. The yield on the overnight index swap due in nine months, based on predictions for the Bank of Canada’s rate at that time, dropped to 0.37 percent, from 0.39 percent on Jan. 8 and 0.47 percent at the end of December.
Central-bank policy makers left the benchmark overnight lending rate unchanged at their last meeting in December. They meet next on rates on Jan. 19.
The currency, which touched an almost three-month high yesterday, pared its gain for January to 1.3 percent after rising 16 percent last year. Crude oil, Canada’s biggest export, dropped as China moved to curb bank lending. The trade deficit in November was C$344 million ($333 million), a government report showed, compared with a median forecast for a C$500 million surplus in a Bloomberg survey of economists.
“If we’d seen this trade data in any other situation the reaction in the market would have been more muted, but after the good rally we’ve seen, the shorter-term players used it to lock in profits,” said Matthew Strauss, a senior currency strategist in Toronto at Royal Bank of Canada, the nation’s biggest lender.
The Canadian dollar, nicknamed the loonie, depreciated 0.6 percent to C$1.0396 per U.S. dollar at 4:21 p.m. in Toronto, from C$1.0335 yesterday, when it reached C$1.0253, the strongest since Oct. 15. The loonie weakened today as much as 0.8 percent, the most on an intraday basis since Dec. 30. One Canadian dollar buys 96.20 U.S. cents.
Government bonds rose, driving down the yield on Canada’s benchmark 10-year note as much as six basis points, or 0.06 percentage point, to 3.55 percent, the lowest level in three weeks. The price of the 3.75 percent note due in June 2019 gained 40 cents to C$101.54.
‘Risk Aversion’
The loonie fell versus 12 of its 16 most-traded counterparts tracked by Bloomberg, while the U.S. dollar rose against 14.
The yen, the No. 1 performer, climbed 1.8 percent to 87.49 versus the Canadian dollar as China’s central bank said it will raise reserve requirements for the nation’s banks. That increased the likelihood it may increase its benchmark interest rate, which reduced demand for higher-yielding assets.
“With China raising rates, risk aversion really played a factor today,” said Steve Butler, director of foreign-exchange trading in Toronto at Bank of Nova Scotia.
Crude oil for February delivery tumbled 2.4 percent to $80.54 a barrel on the New York Mercantile Exchange. Copper for March delivery plunged as much as 4 percent to $3.305 a pound on the Comex division of the New York Mercantile Exchange. Gold for immediate delivery dropped 2.2 percent to $1,126.10 an ounce after touching $1,161.80 yesterday, the highest since Dec. 8.
Raw materials including oil, copper and gold account for half of Canada’s export revenue.
Strengthened Too Much
The Standard & Poor’s 500 Index dropped 0.9 percent.
“The Canadian dollar strengthened beyond where I think we should have last week,” said Shane Enright, a currency strategist in Toronto at Canadian Imperial Bank of Commerce.
The loonie gained 2.2 percent last week, the most since the five days ended Nov. 13. Its high for yesterday approached the closest it has come to parity with the U.S. dollar, C$1.0207 on Oct. 15, since it last traded on a one-for-one basis with the greenback in July 2008.
The Canadian dollar will reach parity in the next two to three months, RBC’s Strauss predicted.
The currency will weaken to C$1.06 by the end of 2010, according to the median forecast in a Bloomberg survey of 29 analysts and economists.
Rates and Housing
Bank of Canada adviser David Wolf in Ottawa yesterday indicated policy makers won’t soon raise interest rates to cool the nation’s housing market.
The lowest mortgage rates since the Korean War helped fuel a 67 percent increase in existing home sales in November from their January 2009 low. The Bank of Canada cut its benchmark lending rate to 0.25 percent in April and has committed to keeping it there through June unless the inflation outlook shifts to aid a recovery.
“If the bank were to raise interest rates to cool the housing market now -- when inflation is expected to remain below target for the next year and a half -- we would, in essence, be dousing the entire Canadian economy with cold water, just as it emerges from recession,” Wolf said yesterday in Edmonton, Alberta.
Canada’s new-housing price index rose 0.4 percent in November from October, Statistics Canada said today in Ottawa.
Traders trimmed bets on future interest rate increases. The yield on the overnight index swap due in nine months, based on predictions for the Bank of Canada’s rate at that time, dropped to 0.37 percent, from 0.39 percent on Jan. 8 and 0.47 percent at the end of December.
Central-bank policy makers left the benchmark overnight lending rate unchanged at their last meeting in December. They meet next on rates on Jan. 19.
Monday, January 11, 2010
Indian Rupee Falls Most in 3 Weeks as Importers May Buy Dollars
Jan. 12 -- India’s rupee fell on speculation local importers will increase dollar purchases to take advantage of the local currency’s gain to a 15-month high.
The rupee dropped the most in more than three weeks as the Dollar Index, which tracks the greenback against those of six major trading partners, rose 0.2 percent. The rupee has strengthened 2.3 percent since Dec. 31, extending a 4.8 percent advance last year.
“Dollar demand is likely to increase as the levels look attractive for importers,” said Jaiprakash Israni, a currency trader in Mumbai at state-owned Andhra Bank. “The rupee is weaker in the offshore market too as the dollar index has risen.”
The rupee slid 0.3 percent to 45.46 per dollar as of 10:47 a.m. in Mumbai, according to data compiled by Bloomberg. It reached 45.2750 yesterday, the highest level since September 2008. The currency may trade between 45.35 and 45.75 today, Israni said.
Offshore contracts indicate bets the rupee will trade at 45.49 to the dollar in a month, compared with expectations of 45.33 at the end of last week. Forwards are agreements in which assets are bought and sold at current prices for future delivery. Non-deliverable contracts are settled in dollars rather than the local currency.
The rupee dropped the most in more than three weeks as the Dollar Index, which tracks the greenback against those of six major trading partners, rose 0.2 percent. The rupee has strengthened 2.3 percent since Dec. 31, extending a 4.8 percent advance last year.
“Dollar demand is likely to increase as the levels look attractive for importers,” said Jaiprakash Israni, a currency trader in Mumbai at state-owned Andhra Bank. “The rupee is weaker in the offshore market too as the dollar index has risen.”
The rupee slid 0.3 percent to 45.46 per dollar as of 10:47 a.m. in Mumbai, according to data compiled by Bloomberg. It reached 45.2750 yesterday, the highest level since September 2008. The currency may trade between 45.35 and 45.75 today, Israni said.
Offshore contracts indicate bets the rupee will trade at 45.49 to the dollar in a month, compared with expectations of 45.33 at the end of last week. Forwards are agreements in which assets are bought and sold at current prices for future delivery. Non-deliverable contracts are settled in dollars rather than the local currency.
Thursday, January 7, 2010
Yen remains steady
TOKYO - THE yen was steady in Asia on Friday after Japan's new finance minister said markets should determine exchange rates, while hinting at possible intervention if the currency shoots higher again.
'Basically, the market determines foreign exchange rates', Mr Naoto Kan said at a news conference. As finance minister, however, it was his duty 'to take action on foreign exchange when necessary', he added.
Mr Kan's remarks came a day after he rattled markets with a call for a weaker yen, prompting a thinly veiled rebuke from Prime Minister Yukio Hatoyama, who warned him not to publicly comment on currency levels. 'The government basically should not discuss foreign exchange,' PM Hatoyama told reporters. 'Regarding foreign exchange, stability is desirable.'
The dollar stood at 93.28 yen in Tokyo early afternoon trade, against 93.25 in New York late on Thursday, when the Japanese currency had fallen sharply. The euro was little changed at US$1.4316 after 1.4318 and at 133.48 against 133.50.
Mr Kan's comment on Thursday that he wanted to see the yen weaken further was widely seen as a signal that Tokyo was toughening its stance against the currency's strength, which is bad for exporters.
'The market confirmed the new finance minister's stance of favouring a weaker yen, so the dollar is staying higher,' said Mr Hideaki Inoue, chief foreign exchange manager at Mitsubishi UFJ Trust and Banking.
'Basically, the market determines foreign exchange rates', Mr Naoto Kan said at a news conference. As finance minister, however, it was his duty 'to take action on foreign exchange when necessary', he added.
Mr Kan's remarks came a day after he rattled markets with a call for a weaker yen, prompting a thinly veiled rebuke from Prime Minister Yukio Hatoyama, who warned him not to publicly comment on currency levels. 'The government basically should not discuss foreign exchange,' PM Hatoyama told reporters. 'Regarding foreign exchange, stability is desirable.'
The dollar stood at 93.28 yen in Tokyo early afternoon trade, against 93.25 in New York late on Thursday, when the Japanese currency had fallen sharply. The euro was little changed at US$1.4316 after 1.4318 and at 133.48 against 133.50.
Mr Kan's comment on Thursday that he wanted to see the yen weaken further was widely seen as a signal that Tokyo was toughening its stance against the currency's strength, which is bad for exporters.
'The market confirmed the new finance minister's stance of favouring a weaker yen, so the dollar is staying higher,' said Mr Hideaki Inoue, chief foreign exchange manager at Mitsubishi UFJ Trust and Banking.
Wednesday, January 6, 2010
Aussie Dollar Rises to 25-Year High Versus Pound on Commodities
Jan. 7 -- The Australian dollar climbed to the strongest in 25 years versus the pound and rose against all 16 major currencies as commodity prices gained and retail sales grew more than four times as fast as economists had estimated.
The so-called Aussie touched a two-year high against the euro after the Bureau of Statistics said retail sales climbed 1.4 percent from October, when they gained a revised 0.4 percent. New Zealand’s currency reached the most in two months versus the yen as the nation posted its narrowest annual trade shortfall in more than seven years.
“It’s all about the commodity story at the moment and today’s retail sales data may get the market excited about more rate hikes in Australia,” said Jonathan Cavenagh, a currency strategist at Westpac Banking Corp. in Sydney. “If we can make a clear break above 58 pence, people have got to start thinking about the 60-level as a realistic possibility.”
Australia’s dollar touched 57.655 pence, the most since March 1985, before trading at 57.577 at 4:58 p.m. in Sydney. It bought 84.89 yen after earlier reaching 85.55 yen, the highest since Sept. 29, 2008. The currency gained 0.1 percent to 92.08 U.S. cents, near the strongest since Dec. 4, from 91.98 cents in New York. It touched 0.6416 euro, the most since November 2007.
New Zealand’s dollar bought 73.72 U.S. cents from 73.78 cents in New York yesterday. It traded at 67.97 yen and reached 68.58 yen, the most since Oct. 27.
Fed Minutes
Demand for Australia’s dollar was also boosted after minutes of a Federal Reserve meeting released yesterday showed policy makers debated extending stimulus measures. Swaps traders raised to 62 percent the chance that Australia’s central bank will increase interest rates when it meets on Feb. 2, from 54 percent yesterday, when according to a Credit Suisse AG index.
“Our forecasts have the Aussie heading back toward last year’s highs near 94 cents in the first quarter,” said Amber Rabinov, an economist in Melbourne at Australia & New Zealand Banking Group Ltd.
The Reuters/Jefferies CRB Index of commodities yesterday climbed for a third day to the strongest level since October 2008. Crude oil, Australia’s fourth most-valuable commodity export, gained for a 10th day yesterday in the longest stretch since February 1996. Commodities account for more than half of Australia’s and New Zealand’s overseas shipments.
Trade Deficit
Australia’s trade deficit narrowed in November with the shortfall at A$1.7 billion ($1.6 billion) from a revised A$2.08 billion in October, the Bureau of Statistics said.
The Australian dollar has been the second best-performing currency against the euro over the past three months among the 16 most-traded. Demand for the euro has waned on speculation Greece’s fiscal problems may also engulf Spain, Ireland and other nations that share the common currency.
“The Aussie doesn’t suffer from the same concerns on the fiscal side that Europe does,” said Sean Callow, a senior currency strategist at Westpac in Sydney. “There’s no obvious barrier to a test of 65 euro cents.” That would be the most the Australian dollar has traded at since September 2000.
New Zealand’s annual trade deficit narrowed to NZ$846 million ($624 million) in the 12 months ended Nov. 30 from a revised NZ$1.17 billion in the year through October, the statistics bureau said today. The shortfall was the least since September 2002.
“The possibility of near-term Reserve Bank of New Zealand hikes cannot be completely ruled out” after the trade figures signaled fourth quarter growth may show an improvement over the previous three-month period, wrote Eric Lascelles, Toronto-based chief economics and rates strategist at Toronto-Dominion Bank, Canada’s second-biggest lender.
New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, rose to 4.59 percent from 4.55 percent yesterday. Australian government bonds were little changed with the yield on 10-year notes at 5.65 percent, according to data compiled by Bloomberg.
The so-called Aussie touched a two-year high against the euro after the Bureau of Statistics said retail sales climbed 1.4 percent from October, when they gained a revised 0.4 percent. New Zealand’s currency reached the most in two months versus the yen as the nation posted its narrowest annual trade shortfall in more than seven years.
“It’s all about the commodity story at the moment and today’s retail sales data may get the market excited about more rate hikes in Australia,” said Jonathan Cavenagh, a currency strategist at Westpac Banking Corp. in Sydney. “If we can make a clear break above 58 pence, people have got to start thinking about the 60-level as a realistic possibility.”
Australia’s dollar touched 57.655 pence, the most since March 1985, before trading at 57.577 at 4:58 p.m. in Sydney. It bought 84.89 yen after earlier reaching 85.55 yen, the highest since Sept. 29, 2008. The currency gained 0.1 percent to 92.08 U.S. cents, near the strongest since Dec. 4, from 91.98 cents in New York. It touched 0.6416 euro, the most since November 2007.
New Zealand’s dollar bought 73.72 U.S. cents from 73.78 cents in New York yesterday. It traded at 67.97 yen and reached 68.58 yen, the most since Oct. 27.
Fed Minutes
Demand for Australia’s dollar was also boosted after minutes of a Federal Reserve meeting released yesterday showed policy makers debated extending stimulus measures. Swaps traders raised to 62 percent the chance that Australia’s central bank will increase interest rates when it meets on Feb. 2, from 54 percent yesterday, when according to a Credit Suisse AG index.
“Our forecasts have the Aussie heading back toward last year’s highs near 94 cents in the first quarter,” said Amber Rabinov, an economist in Melbourne at Australia & New Zealand Banking Group Ltd.
The Reuters/Jefferies CRB Index of commodities yesterday climbed for a third day to the strongest level since October 2008. Crude oil, Australia’s fourth most-valuable commodity export, gained for a 10th day yesterday in the longest stretch since February 1996. Commodities account for more than half of Australia’s and New Zealand’s overseas shipments.
Trade Deficit
Australia’s trade deficit narrowed in November with the shortfall at A$1.7 billion ($1.6 billion) from a revised A$2.08 billion in October, the Bureau of Statistics said.
The Australian dollar has been the second best-performing currency against the euro over the past three months among the 16 most-traded. Demand for the euro has waned on speculation Greece’s fiscal problems may also engulf Spain, Ireland and other nations that share the common currency.
“The Aussie doesn’t suffer from the same concerns on the fiscal side that Europe does,” said Sean Callow, a senior currency strategist at Westpac in Sydney. “There’s no obvious barrier to a test of 65 euro cents.” That would be the most the Australian dollar has traded at since September 2000.
New Zealand’s annual trade deficit narrowed to NZ$846 million ($624 million) in the 12 months ended Nov. 30 from a revised NZ$1.17 billion in the year through October, the statistics bureau said today. The shortfall was the least since September 2002.
“The possibility of near-term Reserve Bank of New Zealand hikes cannot be completely ruled out” after the trade figures signaled fourth quarter growth may show an improvement over the previous three-month period, wrote Eric Lascelles, Toronto-based chief economics and rates strategist at Toronto-Dominion Bank, Canada’s second-biggest lender.
New Zealand’s two-year swap rate, a fixed payment made to receive floating rates, rose to 4.59 percent from 4.55 percent yesterday. Australian government bonds were little changed with the yield on 10-year notes at 5.65 percent, according to data compiled by Bloomberg.
Tuesday, January 5, 2010
Foreign currency exchange may be driven by world's tallest building
The tallest tower in the world was unveiled in Dubai yesterday (January 4th) and it may encourage foreign currency exchange as travellers look to visit the emirate.
Standing at 828 metres tall, the Burj Khalifa tower is bigger than any other building and also hosts the world's highest observation deck on the 124th floor.
Tom Hall, travel editor at Lonely Planet, suggested it could be quite a good year "to go to snag a bargain" in Dubai.
He said: "It's certainly already very attractive in terms of flight prices to get there because emirates are very keen that people should use it as a transit hub and go there as a short break destination."
According to research carried out by travel site simonseeks.com more than half of those who holidayed in the UK last year plan to travel abroad in 2010.
Standing at 828 metres tall, the Burj Khalifa tower is bigger than any other building and also hosts the world's highest observation deck on the 124th floor.
Tom Hall, travel editor at Lonely Planet, suggested it could be quite a good year "to go to snag a bargain" in Dubai.
He said: "It's certainly already very attractive in terms of flight prices to get there because emirates are very keen that people should use it as a transit hub and go there as a short break destination."
According to research carried out by travel site simonseeks.com more than half of those who holidayed in the UK last year plan to travel abroad in 2010.
Japanese Yen Leads Major Currencies Higher Against US Dollar on Repatriation
The Yen surged against the US Dollar late into Asian trading amid rumors of large-scale repatriation by Japanese exporters, setting off a wave of selling that weighed on the greenback against most of its major counterparts.
The Euro and the British Pound rose gently higher in Asian trading, adding 0.3% apiece against the US Dollar. We remain short EURUSD at 1.4881 and short GBPUSD at 1.6648.
Currency markets saw quiet trading for much of the overnight session until rumors of large-scale repatriation by Japanese exporters pushed the Yen higher against the US Dollar, reverberating across the majors and weighing on the greenback against most of its top counterparts. The Japanese unit gained as much as 0.9%, leading USDJPY back below the 92.00 level. The broader Dollar Index, a gauge of the buck’s average value against six of the world’s most-traded currencies, declined 0.4% to trade at the lost level in over two weeks.
The Euro and the British Pound rose gently higher in Asian trading, adding 0.3% apiece against the US Dollar. We remain short EURUSD at 1.4881 and short GBPUSD at 1.6648.
Currency markets saw quiet trading for much of the overnight session until rumors of large-scale repatriation by Japanese exporters pushed the Yen higher against the US Dollar, reverberating across the majors and weighing on the greenback against most of its top counterparts. The Japanese unit gained as much as 0.9%, leading USDJPY back below the 92.00 level. The broader Dollar Index, a gauge of the buck’s average value against six of the world’s most-traded currencies, declined 0.4% to trade at the lost level in over two weeks.
Sunday, January 3, 2010
Dollar Trades Near Four-Month High Versus Yen on Risk Appetite
Jan. 4 -- The dollar traded near a four-month high against the yen as signs the U.S. recovery is strengthening buoyed demand for assets in the world’s biggest economy.
The U.S. currency rose to a one-week high against the euro before reports this week forecast to show that U.S. manufacturing, which accounts for about 12 percent of the economy, expanded for a fifth month and factory bookings increased. The British currency fell after the Sunday Telegraph reported that U.K. Business Secretary Peter Mandelson said the pound’s devaluation aided Britain’s economy in the recession.
“Good U.S. data are giving investors more confidence in the greenback,” said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd. “The dollar is likely to trade with a firm tone.”
The dollar was at 92.88 yen at 11:28 a.m. in Tokyo from 93.02 yen in New York on Dec. 31 when it touched 93.15 yen, the highest level since Sept. 7. The yen was worth 132.66 per euro from 133.20 yen last week. The dollar gained to $1.4285 per euro, compared with $1.4321 on Dec. 31, after earlier touching $1.4262, the strongest level since Dec. 23.
The pound slid to $1.6090 from $1.6170 on Dec. 31.
The U.S. Institute for Supply Management will report today its factory index rose in December to 54 from 53.6 the prior month, according to a Bloomberg News survey. The gauge has surpassed the breakeven level of 50 since August.
A separate report from the Commerce Department tomorrow will show factory bookings increased 0.5 percent in November after rising 0.6 percent the previous month, according to economists surveyed.
Annual Advance
The Dollar Index climbed as much as 0.4 percent, the most in more than two weeks, as prospects for better manufacturing and an improved job market stoked speculation the Federal Reserve will start raising ahead of other central banks.
Futures trading in Chicago showed a 60 percent chance that the Fed will increase its zero to 0.25 percent target lending rate by at least a quarter-percentage point by its June meeting, compared with 31 percent odds a month ago.
The yen has weakened 2.4 percent versus the dollar in the past month as the Bank of Japan said Dec. 18 it was intolerant of price declines amid signs deflation may undermine the economic recovery.
BOJ Governor Masaaki Shirakawa said on Dec. 24 his policy board is ready to act to support growth, and some strategists are predicting that will result in a flood of Japanese currency that will weaken the yen.
U.S. Rates
“The dollar continued to rise against the yen on prospects for higher U.S. official rates this year and the potential for Japan to embark on aggressive quantitative easing to fight deflation in prices,” John Kyriakopoulos, Sydney-based head of currency strategy at National Australia Bank Ltd., wrote in research note today.
The U.S. currency rose 2.6 percent against the yen in 2009 as the yield premium of 10-year Treasury notes over similar- maturity Japanese bonds rose last week to the highest level in more than two years, making U.S. debt more appealing than Japan’s securities.
Losses in the yen were tempered by speculation Japanese exporters were taking advantage of the past month’s decline to bring home foreign earnings.
Japanese Exporters
“There is talk exporters are buying the yen, which has fallen to attractive levels relative to the rates budgeted,” said Takashi Kudo, general manager of market information service in Tokyo at NTT SmartTrade Inc., a unit of Nippon Telegraph & Telephone Corp.
Large Japanese manufacturers expect the yen to average 91.16 per dollar in the six months to March 2010, according to the Bank of Japan’s quarterly Tankan survey released last month.
The British currency fell for a second day versus the dollar on concerns that U.K. policy makers want a weak currency to revive the nation’s economy.
Sterling, which declined 19 percent against the dollar in the 2008-2009 period, has aided the U.K., the Telegraph cited Mandelson as saying. The business secretary praised the Bank of England for its asset-purchase program, the newspaper said.
“The article suggests the U.K. may prefer currency weakness this year,” said Yoh Nihei, trading group manager at Tokai Tokyo Securities Co. in Tokyo. “It’s a pound-negative.”
Pacific Investment Management Co., which runs the world’s biggest bond fund, is cutting holdings of U.K. and U.S. debt as borrowing rises in the nations, the company said in a report on its Web site.
The U.S. currency rose to a one-week high against the euro before reports this week forecast to show that U.S. manufacturing, which accounts for about 12 percent of the economy, expanded for a fifth month and factory bookings increased. The British currency fell after the Sunday Telegraph reported that U.K. Business Secretary Peter Mandelson said the pound’s devaluation aided Britain’s economy in the recession.
“Good U.S. data are giving investors more confidence in the greenback,” said Masanobu Ishikawa, general manager of foreign exchange at Tokyo Forex & Ueda Harlow Ltd. “The dollar is likely to trade with a firm tone.”
The dollar was at 92.88 yen at 11:28 a.m. in Tokyo from 93.02 yen in New York on Dec. 31 when it touched 93.15 yen, the highest level since Sept. 7. The yen was worth 132.66 per euro from 133.20 yen last week. The dollar gained to $1.4285 per euro, compared with $1.4321 on Dec. 31, after earlier touching $1.4262, the strongest level since Dec. 23.
The pound slid to $1.6090 from $1.6170 on Dec. 31.
The U.S. Institute for Supply Management will report today its factory index rose in December to 54 from 53.6 the prior month, according to a Bloomberg News survey. The gauge has surpassed the breakeven level of 50 since August.
A separate report from the Commerce Department tomorrow will show factory bookings increased 0.5 percent in November after rising 0.6 percent the previous month, according to economists surveyed.
Annual Advance
The Dollar Index climbed as much as 0.4 percent, the most in more than two weeks, as prospects for better manufacturing and an improved job market stoked speculation the Federal Reserve will start raising ahead of other central banks.
Futures trading in Chicago showed a 60 percent chance that the Fed will increase its zero to 0.25 percent target lending rate by at least a quarter-percentage point by its June meeting, compared with 31 percent odds a month ago.
The yen has weakened 2.4 percent versus the dollar in the past month as the Bank of Japan said Dec. 18 it was intolerant of price declines amid signs deflation may undermine the economic recovery.
BOJ Governor Masaaki Shirakawa said on Dec. 24 his policy board is ready to act to support growth, and some strategists are predicting that will result in a flood of Japanese currency that will weaken the yen.
U.S. Rates
“The dollar continued to rise against the yen on prospects for higher U.S. official rates this year and the potential for Japan to embark on aggressive quantitative easing to fight deflation in prices,” John Kyriakopoulos, Sydney-based head of currency strategy at National Australia Bank Ltd., wrote in research note today.
The U.S. currency rose 2.6 percent against the yen in 2009 as the yield premium of 10-year Treasury notes over similar- maturity Japanese bonds rose last week to the highest level in more than two years, making U.S. debt more appealing than Japan’s securities.
Losses in the yen were tempered by speculation Japanese exporters were taking advantage of the past month’s decline to bring home foreign earnings.
Japanese Exporters
“There is talk exporters are buying the yen, which has fallen to attractive levels relative to the rates budgeted,” said Takashi Kudo, general manager of market information service in Tokyo at NTT SmartTrade Inc., a unit of Nippon Telegraph & Telephone Corp.
Large Japanese manufacturers expect the yen to average 91.16 per dollar in the six months to March 2010, according to the Bank of Japan’s quarterly Tankan survey released last month.
The British currency fell for a second day versus the dollar on concerns that U.K. policy makers want a weak currency to revive the nation’s economy.
Sterling, which declined 19 percent against the dollar in the 2008-2009 period, has aided the U.K., the Telegraph cited Mandelson as saying. The business secretary praised the Bank of England for its asset-purchase program, the newspaper said.
“The article suggests the U.K. may prefer currency weakness this year,” said Yoh Nihei, trading group manager at Tokai Tokyo Securities Co. in Tokyo. “It’s a pound-negative.”
Pacific Investment Management Co., which runs the world’s biggest bond fund, is cutting holdings of U.K. and U.S. debt as borrowing rises in the nations, the company said in a report on its Web site.
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