Aug. 13 (Bloomberg) -- The yen's seven-week rally is about to end.
New York-based JPMorgan Private Bank and Mitsubishi UFJ Asset Management Co. in Tokyo say they are selling the yen because five straight months of declining consumer prices will delay an increase in interest rates by the Bank of Japan, the one thing that would justify further gains. A government report today showed second-quarter economic growth slowed more than expected.
Gross domestic product eased to less than a third of the first-quarter's pace and a global credit crunch may make it harder for the Bank of Japan to justify raising borrowing costs from 0.5 percent, the lowest in the world. In the yen's first failure to rise last week since the five days ended July 6, the currency fell 0.3 percent to 118.40 per U.S. dollar.
``There are no Japanese reasons for the yen to rally,'' said Robert Robis, an international fixed-income portfolio manager at OppenheimerFunds Inc. in New York, which oversees $250 billion. ``The economic data are looking worse, not better. Without consumption or inflation picking up, it is hard to justify a BOJ rate hike.''
Since its low this year of 124.13 per dollar on June 22, the first full day of summer in the Northern Hemisphere, Japan's currency has risen 4.6 percent against the dollar. Of the 16 major currencies, only the Swiss franc's 2.55 percent gain comes close to the performance of the yen. The yen was at 118.36 at 7:40 a.m. in London
Monday, August 13, 2007
Oil Is Little Changed After Gaining on Demand, Storm Outlook
Aug. 14 (Bloomberg) -- Crude oil was little changed in New York after rising yesterday for the first time in four sessions as concerns eased that credit-market losses will result in an economic slowdown and reduce fuel demand.
Central banks have added more than $300 billion to their banking systems since Aug. 9 to boost confidence. Oil prices are also being supported by a forecast that a tropical depression in the eastern Atlantic Ocean may become a hurricane, potentially disrupting Gulf of Mexico oil production.
``The forecasts for demand continue to remain very strong so you have a pretty good market there,'' said Andrew Harrington, a commodities analyst at Australia & New Zealand Banking Group Ltd. in Sydney. ``There's that developing storm situation and perhaps there are a couple of concerns around that front.''
Crude oil for September delivery was at $71.60 a barrel, down 2 cents, in after-hours electronic trading on the New York Mercantile Exchange at 7:15 a.m. Singapore time. Yesterday the contract gained 15 cents, or 0.2 percent, to $71.62. Oil is down 9.1 percent from an Aug. 1 record of $78.77 a barrel.
Crude fell 5.3 percent last week on concern loan defaults would reduce growth. The European Central Bank yesterday loaned banks $65 billion, adding emergency funds for a third day, and said money markets are returning to normal.
U.S. demand for petroleum products rose to its highest level in two months in the week ended Aug. 3. The International Energy Agency last week pegged global oil demand for 2007 at 86 million barrels a day, unchanged from a previous forecast, even as it trimmed an estimate for fourth-quarter U.S. demand.
Central banks have added more than $300 billion to their banking systems since Aug. 9 to boost confidence. Oil prices are also being supported by a forecast that a tropical depression in the eastern Atlantic Ocean may become a hurricane, potentially disrupting Gulf of Mexico oil production.
``The forecasts for demand continue to remain very strong so you have a pretty good market there,'' said Andrew Harrington, a commodities analyst at Australia & New Zealand Banking Group Ltd. in Sydney. ``There's that developing storm situation and perhaps there are a couple of concerns around that front.''
Crude oil for September delivery was at $71.60 a barrel, down 2 cents, in after-hours electronic trading on the New York Mercantile Exchange at 7:15 a.m. Singapore time. Yesterday the contract gained 15 cents, or 0.2 percent, to $71.62. Oil is down 9.1 percent from an Aug. 1 record of $78.77 a barrel.
Crude fell 5.3 percent last week on concern loan defaults would reduce growth. The European Central Bank yesterday loaned banks $65 billion, adding emergency funds for a third day, and said money markets are returning to normal.
U.S. demand for petroleum products rose to its highest level in two months in the week ended Aug. 3. The International Energy Agency last week pegged global oil demand for 2007 at 86 million barrels a day, unchanged from a previous forecast, even as it trimmed an estimate for fourth-quarter U.S. demand.
Dubai ready with $4b OMX offer
Dubai: Borse Dubai, the newly formed holding company of Dubai International Financial Exchange and Dubai Financial Market is all set to make a $4 billion full takeover offer to shareholders of OMX this week, according to investment banking sources and media reports.
The UK's Sunday Times yesterday reported that the Dubai firm will seek the approval of the OMX board to make a full £2 billion ($4 billion) takeover offer for the exchange this week, to beat Nasdaq's $3.7 billion bid. Borse Dubai chairman Eisa Kazim was not available for comment.
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Reacting to the reports, Bo Albertsson, a public relations representative for Borse Dubai told Gulf News from Stockholm yesterday that the company has no comments to offer on talks about a full-scale bid. "We have nothing more to say than what has been said in a statement on Thursday. We cannot comment on market talks," he said.
Borse Dubai currently owns 4.9 per cent of OMX and has options for 22.5 per cent. The options are through a book building process with some unnamed investors, taking Dubai's total potential stake to 27.4 per cent.
Last week's purchase of shares by Borse Dubai has come under regulatory scrutiny in Sweden.
Albertsson yesterday asserted that the Dubai firm complied with all Swedish laws while making the acquisition.
The UK's Sunday Times yesterday reported that the Dubai firm will seek the approval of the OMX board to make a full £2 billion ($4 billion) takeover offer for the exchange this week, to beat Nasdaq's $3.7 billion bid. Borse Dubai chairman Eisa Kazim was not available for comment.
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Reacting to the reports, Bo Albertsson, a public relations representative for Borse Dubai told Gulf News from Stockholm yesterday that the company has no comments to offer on talks about a full-scale bid. "We have nothing more to say than what has been said in a statement on Thursday. We cannot comment on market talks," he said.
Borse Dubai currently owns 4.9 per cent of OMX and has options for 22.5 per cent. The options are through a book building process with some unnamed investors, taking Dubai's total potential stake to 27.4 per cent.
Last week's purchase of shares by Borse Dubai has come under regulatory scrutiny in Sweden.
Albertsson yesterday asserted that the Dubai firm complied with all Swedish laws while making the acquisition.
Gold, Silver May Decline as Dollar Strengthens Against Euro
Aug. 13 (Bloomberg) -- Gold and silver, little changed in New York, may fall as a gain in the value of the dollar reduces the appeal of the precious metals as an alternative investments.
Gold generally moves in the opposite direction of the U.S. dollar. Before today, gold had gained 6.8 percent this year while the euro had climbed 3.8 percent against the dollar.
``Dollar strength is a limiting factor for gold now,'' said Frank Lesh, a trader at FuturePath Trading LLC in Chicago.
Gold futures for December delivery fell $1.20 to $680.40 an ounce at 12:12 p.m. on the Comex division of the New York Mercantile Exchange.
Silver futures for September delivery fell 3 cents to $12.84 an ounce. Before today, the metal had fallen 0.5 percent this year.
The euro traded as low as $1.3606 after the European Central Bank lent emergency funds to banks for a third day to ease concern over a credit crunch, and stocks rallied worldwide. The euro reached a record $1.3852 on July 24.
The ECB, the U.S. Federal Reserve and other central banks injected $154 billion into money markets on Aug. 9 and $135.7 billion on Aug. 10 amid fears that U.S. subprime mortgage losses will curtail lending.
Gold may gain should investors lose confidence in the dollar and other currencies, analysts said.
``During periods where investors question credit quality, gold's monetary characteristics become more appreciated,'' said Gregory Orrell, who manages $120 million, including mining stocks, at Orrell Capital Management Inc. in Livermore, California.
Gold generally moves in the opposite direction of the U.S. dollar. Before today, gold had gained 6.8 percent this year while the euro had climbed 3.8 percent against the dollar.
``Dollar strength is a limiting factor for gold now,'' said Frank Lesh, a trader at FuturePath Trading LLC in Chicago.
Gold futures for December delivery fell $1.20 to $680.40 an ounce at 12:12 p.m. on the Comex division of the New York Mercantile Exchange.
Silver futures for September delivery fell 3 cents to $12.84 an ounce. Before today, the metal had fallen 0.5 percent this year.
The euro traded as low as $1.3606 after the European Central Bank lent emergency funds to banks for a third day to ease concern over a credit crunch, and stocks rallied worldwide. The euro reached a record $1.3852 on July 24.
The ECB, the U.S. Federal Reserve and other central banks injected $154 billion into money markets on Aug. 9 and $135.7 billion on Aug. 10 amid fears that U.S. subprime mortgage losses will curtail lending.
Gold may gain should investors lose confidence in the dollar and other currencies, analysts said.
``During periods where investors question credit quality, gold's monetary characteristics become more appreciated,'' said Gregory Orrell, who manages $120 million, including mining stocks, at Orrell Capital Management Inc. in Livermore, California.
Markets May Rebound on Better than Expected Retail Sales and Bargain Hunting
The major U.S. Index futures are pointing to a higher opening on Monday. The significant pullback in the previous couple of sessions lays a solid foundation for a rebound, and the release of better than expected retail sales for July may turn out to be the positive catalyst that the markets are waiting for. Global cues have also been very encouraging. Higher metal prices could offer support to the resources space. Nonetheless, caution cannot be ruled out ahead of key inflation reports, due out in the week. Despite the week’s turmoil over a potential liquidity crisis emanating from the offshoots of the subprime mortgage crisis, the major averages ended the week ended August 10th on a positive note. The indexes turned higher after posting weekly losses in each of the previous three weeks. Bargain hunting lifted stocks on Monday, as traders bought into beaten down financial stocks. The buying momentum was sustained on Tuesday, even though the Federal Reserve did not alter its language markedly to imply a dovish stance. Solid earnings from networking giant Cisco Systems (CSCO) helped sustain the momentum in Wednesday’s session, as the Dow notched up triple-digit gains and the Nasdaq Composite advanced over 2%. However, Thursday’s session turned out to be a nightmare for the markets, as a confession by French bank BNP Paribas that it is suspending three of its mortgage-backed funds with exposure to U.S. subprime market send stocks into a tailspin. The financial market turbulence forced central banks of major countries to pump in money to sidestep a credit crisis. Despite showing significant weakness for most of Friday’s session, the major averages closed on a mixed note on Friday.
Gold Closes Modestly Lower, Other Metals Mixed
8/13/2007 2:42:25 PM The price of gold moved modestly lower during trading on Monday, giving back some ground after showing a strong upward move in the previous session. Gold for December delivery closed down $0.70 at $680.90 an ounce. The modest decrease by the price of gold came amid some strength in the value of the U.S. dollar, which moved higher on the heels of the release of slightly better than expected retail sales data for the month of July. A report from the Commerce Department showed that retail sales rose 0.3 percent in July following a revised 0.7 percent decrease in June. Economists had expected sales to edge up 0.2 percent compared to the 0.9 percent decrease originally reported for the previous month.Some traders also moved their money out of the safe haven of gold on news that the Federal Reserve and the European Central bank are injecting more money into the banking system, with the ECB saying that it now views the market as normalized.The other metal prices turned in a mixed performance, with the prices of silver and palladium moving lower along with the price of gold. Silver for September delivery closed down $0.015 at $12.855 an ounce, while palladium for September delivery closed down $0.05 at $358.15 an ounce.On the other hand, copper for September delivery closed up $0.0815 at $3.441 a pound after ending the previous session at a one-month closing low. Platinum for October delivery closed up $7.80 at $1,287.10 an ounce.
ECB reportedly weighs dollar swap with Fed
LONDON (MarketWatch) -- The European Central Bank on Monday injected another 47.5 billion euros ($65 billion) in loans into the banking system and is reportedly in talks with the U.S. Federal Reserve on a currency swap, so it can provide dollars to European banks struggling to meet money-market needs.
Should the ECB and Fed agree on such a swap, the Frankfurt-based central bank would exchange euros or other currencies it holds for dollars. The ECB and the Fed would then unwind the trade after a fixed term -- say 30 days, as done in the aftermath of the Sept. 11 terrorist attacks -- and the ECB would pay a small amount extra to reflect the 1.25 percentage point gap in the central banks' interest rates.
The ECB, which last week pumped more than 150 billion euros into the European banking system, is reportedly seeking out dollars because of difficulties that European banks are having with funds invested in asset-backed securities, according to several British media reports.
Other asset-backed securities funds from Union Investment, Frankfurt Trust and WestLB Mellon Asset Management have also been halted.
In addition to the halting of those funds, there are European money-market funds -- so-called "enhanced" money-market funds -- that have investment exposure to the asset-backed securities sector.
According to data compiled by Morningstar, there are more than 500 of enhanced money market funds available in Europe, though not all are invested in asset-backed securities. More than 25% have declined in value over the last month.
Should the ECB and Fed agree on such a swap, the Frankfurt-based central bank would exchange euros or other currencies it holds for dollars. The ECB and the Fed would then unwind the trade after a fixed term -- say 30 days, as done in the aftermath of the Sept. 11 terrorist attacks -- and the ECB would pay a small amount extra to reflect the 1.25 percentage point gap in the central banks' interest rates.
The ECB, which last week pumped more than 150 billion euros into the European banking system, is reportedly seeking out dollars because of difficulties that European banks are having with funds invested in asset-backed securities, according to several British media reports.
Other asset-backed securities funds from Union Investment, Frankfurt Trust and WestLB Mellon Asset Management have also been halted.
In addition to the halting of those funds, there are European money-market funds -- so-called "enhanced" money-market funds -- that have investment exposure to the asset-backed securities sector.
According to data compiled by Morningstar, there are more than 500 of enhanced money market funds available in Europe, though not all are invested in asset-backed securities. More than 25% have declined in value over the last month.
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