Monday, 16 December 2013

European Stocks Drop With Silver Before Fed Meeting as Yen Gains

By Glenys Sim and Jonathan Burgos  Dec 16, 2013 12:18 AM PT

Photographer: Chris Ratcliffe/Bloomberg
Silver slipped 0.5 percent to $19.5971 an ounce.
Most European stocks fell and U.S. equity futures dropped with silver before a two-day Federal Reserve meeting starting tomorrow, while oil rallied. Asian stocks fell toward a three-month low as a survey showed Chinese manufacturing expanding less than estimated and the yen rose.
The Stoxx Europe 600 Index slipped 0.1 percent at 8:03 a.m. in London, with three shares falling for every two that gained. Standard & Poor’s 500 Index futures lost 0.3 percent and the MSCI Asia Pacific Index dropped 0.7 percent. Japan’s Topix declined 1.3 percent as the yen advanced against all 16 major peers. Gold and silver lost at least 0.5 percent. Brent crude rose 0.3 percent as rebels refused to open Libya’s ports, while natural gas sank 1.3 percent.
Economists see an increased chance Fed policy makers will begin reducing stimulus amid signs of improvement in the U.S. labor market and after lawmakers passed a bipartisan budget. Private surveys on French and Chinese manufacturing missed estimates ahead of other reports today that may signal growth in factory activity in the euro region and the U.S., according to Bloomberg surveys.
“Tapering is all that the market cares about at the moment,” said Khiem Do, Hong Kong-based head of Asian multi-asset strategy at Baring Asset Management Ltd., which oversees about $60 billion. “Some are predicting the Chinese economy will continue to slow down, perhaps in a more sustainable path.”

Chinese Manufacturing

Two companies fell for each that rose on the Euro Stoxx 600 Index and the MSCI Asia Pacific Index headed for its lowest close since September.
The Shanghai Composite Index (SHCOMP) dropped 1.6 percent, decreasing for a fifth day in the longest stretch of losses since June. The preliminary reading of the Purchasing Managers’ Index by HSBC Holdings Plc and Markit Economics missed the 50.9 median estimate in a Bloomberg News survey. The gauge has signaled expansion since August.
The government will maintain continuity and stability in its macro-economic policies in 2014 and stick to a prudent monetary policy and proactive fiscal policy, China Central Television reported, citing a statement from the annual Central Economic Work Conference that ended Dec. 13.
Japan’s Topix Index (TPX) fell for a fourth day, the longest losing streak in 10 weeks. Large Japanese businesses pared their projections for capital spending this fiscal year, a Bank of Japan report showed. The Tankan index of sentiment among large manufacturers beat estimates, indicating confidence is at the highest since 2007.

Yen Climbs

The yen climbed 0.3 percent to 102.91 per dollar and advanced 0.3 percent to 141.44 per euro. The Bank of Japan, which buys more than 7 trillion yen ($68 billion) of the nation’s government bonds every month to end deflation, starts a two-day meeting on Dec. 19.
Australia’s dollar slipped 0.2 percent to 89.45 U.S. cents after a 1.5 percent drop in the five days to Dec. 13 capped its eighth straight weekly decline, the longest slump since 1985.
Reserve Bank of Australia Governor Glenn Stevens signaled last week a preference for supporting the economy via a weaker currency than with further rate cuts. An exchange rate of 85 U.S. cents is “closer to the mark” than 95 cents, he said in an interview with the Australian Financial Review.
Brent futures rose to $109.16 a barrel after falling 2.5 percent last week. Libyan rebel leader Ibrahim Al Jedran told a news conference yesterday that three key oil ports closed since the end of July will remain shut after the government rejected demands that included a share of crude revenue.
Natural gas futures dropped to $4.29 per million British thermal units as meteorologists predicted moderating temperatures that would curb demand for the heating fuel after frigid weather last week.

U.S. Stocks

Silver slipped 0.8 percent to $19.5478 an ounce, while gold lost 0.5 percent to $1,232.75 before theFederal Open Market Committee meets tomorrow. The Fed may begin reducing its $85 billion of monthly bond purchases at its Dec. 17-18 meeting, according to 34 percent of economists in a Dec. 6 Bloomberg survey, up from 17 percent in a Nov. 8 poll.
S&P 500 futures, which dropped as much as 0.8 percent, signaled the gauge may extend last week’s 1.7 percent drop that was the worst such performance since August. House of Representativespassed the first bipartisan budget in four years, clearing the way for final Senate passage this week. The deal would avoid another government shutdown and ease automatic spending cuts.
“It’s a 50/50 call whether the Fed will go this week but certainly some of the things that they were worried about in September have been resolved or are looking better and they’re definitely closer to tapering,” said Bevan Graham, chief economist in Wellington at AMP Capital Investors Ltd. “The market is more ready for it now.”

Economic Reports

Industrial production in the U.S. probably rose 0.6 percent last month from October when it fell 0.1 percent, while a gauge of manufacturing in the New York region is likely to have advanced to a three-month high, separate Bloomberg News surveys of economists showed.
In Europe, European Central Bank President Mario Draghi is scheduled to speak to the European Parliament in Brussels, while Markit Economics will probably say today that its composite index for the services and manufacturing industries in the currency bloc rose to 52 in December from 51.7 in November.
To contact the reporters on this story: Glenys Sim in Singapore at; Jonathan Burgos in Singapore at
To contact the editor responsible for this story: Nick Gentle at

Monday, 9 December 2013

Yen Weakens as Investors Seek Riskier Assets; Krone Advances

By Joseph Ciolli and Lucy Meakin  Dec 9, 2013 5:56 AM PT
The yen weakened versus the majority of its major peers as investors sought higher-yielding assets amid an advance in global stocks.
BBVA Says `Short' Euro Against Dollar: FX FocusJapan’s currency reached a five-year high versus the euro before three Federal Reserve officials speak today as speculation grows that the U.S. central bank may begin to trim its monthly bond-buying as soon as next week. Norway’s krone rose after touching an almost four-year low against the euro and Australia’s dollar dropped.
“Given that we’re in a situation where risk is positive, which helps equities, dollar-yen is going to go higher,” Dan Dorrow, the head of research at Faros Trading in StamfordConnecticut, said in a phone interview. “Risk is rallying.”
The yen declined 0.1 percent to 103.05 per dollar at 8:52 a.m. New York time. It touched 103.38 on Dec. 3, the weakest since May 23. The Japanese currency slid 0.3 percent to 141.41 per euro after touching 141.55, the least since October 2008. The 17-member euro rose 0.1 percent to $1.3722.
Futures on the Standard & Poor’s 500 Index of stocks rose 0.2 percent. The MSCI World Index increased 0.1 percent, following a 0.9 percent jump at the end of last week, while the Stoxx Europe 600 Index was little changed after advancing 0.7 percent on Dec. 6.

Futures Positions

Futures traders increased bets the yen will decline against the dollar, figures from the Washington-based Commodity Futures Trading Commission show. The difference in the number of wagers by hedge funds and other large speculators on a decline in the yen compared with those on a gain -- so-called net shorts -- was 133,383 on Dec. 3, the most since July 2007, and compared with bearish bets of 123,202 a week earlier.
Australia’s dollar halted a two-day gain versus its U.S. counterpart on prospects the local economy will lag behind an improvement in U.S. growth, damping demand for the South Pacific nation’s assets. The Aussie fell 0.2 percent to 90.83 U.S. cents.
Norway’s krone strengthened amid bets recent declines were overdone and as oil prices rose. West Texas Intermediate traded near the highest in almost six weeks, with WTI for January delivery at $97.71 a barrel in electronic trading on the New York Mercantile Exchange.

Krone Rally

“Oil has been soft in recent months and therefore it takes some of the steam out of the Norwegian krone,” said Jane Foley, a senior currency strategist at Rabobank International in London. “We will see a pick-up in the Norwegian krone.”
Underlying consumer prices in Norway rose 2 percent in November from a year earlier, according to the median estimate of economists surveyed by Bloomberg News before the data tomorrow.
The Norwegian krone rose 0.2 percent to 8.4281 per euro after depreciating to 8.4513, the weakest since December 2009. It advanced 0.4 percent to 6.1417 per dollar.
The krone has fallen 7.1 percent in the past six months, the biggest drop among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The euro gained 4 percent and the dollar lost 0.2 percent.
St. Louis Fed President James Bullard said on Nov. 20 a strong jobs report could increase the chances of slowing the pace of bond purchases this month. Dallas Fed President Richard Fisher, who will vote on policy next year, said on Dec. 5 the Fed at the start of tapering purchases should provide “a definite path as to when we reach zero.” Richmond Fed President Jeffrey Lacker is also scheduled to speak.

Dollar Positive

“You’re in this sweet spot for dollar-yen where the markets are beginning to believe tapering is coming but risk appetite is not being disrupted,” said Derek Halpenny, European head of global-markets research at Bank of Tokyo-Mitsubishi UFJ Ltd. in London. “In a climate of risk appetite being strong into year-end and equities moving higher, that’s certainly supportive for the euro. The obvious trade is euro-yen.”
The Federal Open Market Committee will probably begin reducing $85 billion in monthly bond buying at the Dec. 17-18 meeting, according to 34 percent of economists surveyed on Dec. 6 by Bloomberg, an increase from 17 percent in a Nov. 8 poll.
“If Fed hawks Lacker and Fisher say something supportive of a December taper, it’ll trigger dollar buying, and we could test the May high in dollar-yen,” said Toshiya Yamauchi, a senior analyst in Tokyoat Ueda Harlow Ltd., which provides margin-trading services, referring to the greenback’s five-year high of 103.74.
U.S. data last week showed the jobless rate dropped to a five-year low of 7 percent in November as employers added more workers than forecast.
“The global mood is really quite positive, given we have genuinely better signs on the U.S. economy and the prospect of a reduction in Fed QE is not enough to upset equities,” Sean Callow, a senior currency strategist at Westpac Banking Corp. in Sydney, said of the U.S central bank’s quantitative easing program. “Yen weakness has been given another shot in the arm.”
To contact the reporters on this story: Joseph Ciolli in New York at; Lucy Meakin in London at
To contact the editor responsible for this story: Dave Liedtka at

Ex-BOJ Official Says 100 Yen Seen on No Kuroda-Shock Repeat

By Kevin Buckland and Hiroko Komiya  Dec 8, 2013 10:43 PM PT

Photographer: Junko Kimura/Bloomberg
U.S. and Japanese national flags are displayed on a desk close to a dealer working at a... Read More
The yen will rally to 100 per dollar in the first half of next year because the Bank of Japanwon’t be able to expand monetary easing by enough to repeat this year’s success, a former central bank official said.
The so-called Kuroda Shock in April set off the yen’s biggest drop since October 2008 and pushed 10-year yields to a record low after BOJ Governor Haruhiko Kurodapledged to double the monetary base to achieve a 2 percent inflation target. The central bank won’t be able to spring a similar surprise on the market next year, said Tohru Sasaki, who worked at the central bank from 1992 to 2003 and is now JPMorgan’s Tokyo-based head of Japan rates and currency research.
“Next time the BOJ can’t beat market expectations,” he said in an interview on Dec. 5. “It’s already done so much.”
Kuroda will increase total debt buying by 10 trillion yen ($97 billion) for the 12 months ending March 31, 2015, from the current pace of 7 trillion yen a month, at the BOJ’s April 30 meeting, JPMorgan predicts. He will double purchases of exchange-traded funds to 2 trillion yen a year, JPMorgan says. Nineteen economists in a Bloomberg News poll in October said the BOJ will add stimulus in the second quarter of next year, with seven saying it will ease in the July-September period.
The yen will reach as low as 104 per dollar before the BOJ’s April meeting, after which investors disappointed by the scope of Kuroda’s policy announcements are likely to buy back the Japanese currency, Sasaki said.

Second-Half Slump

Demand for the yen may wane again during the second half, driving it down as low as 110 by year-end, should Japan maintain economic growth amid a global recovery, Sasaki said.
Japan’s currency was at 103.02 per dollar as of 6:40 a.m. in London, after reaching a five-year low of 103.74 in May. Benchmark 10-year yields were little changed at 0.66 percent.
The yen tumbled 3.4 percent on April 4, when Kuroda announced his easing measures. Japan’s benchmark 10-year government bond yield plunged to touch a record 0.315 percent on April 5, from 0.56 at the end of March.
The Nikkei 225 Stock Average gained for a second day, advancing 2.3 percent, while the Topix rose 1.6 percent.
Japan’s economy will expand 3.6 percent this quarter from the previous period, and accelerate to 4.8 percent growth at the start of 2014, according to the median estimate of economists polled by Bloomberg News.

Growth Slows

Economic growth slowed to an annualized 1.1 percent in the third quarter, weaker than the 1.9 percent initial estimate and down from the 3.6 percent expansion in the three months ended June 30, the Cabinet Office said today in Tokyo. Japan’s current account registered a 128 billion yen shortfall, the first deficit since January, according to the finance ministry.
A consumption tax increase in April will pose a major challenge to Japan’s economy, which JPMorgan expects will shrink 4.5 percent in the second quarter.
“The key point for the Japanese economy is the third quarter and the fourth quarter, if it goes back to a positive number or not,” Sasaki said. “Japan is expected to be a strong country. That’s why the yen is weakening.”
To contact the reporters on this story: Kevin Buckland in Tokyo at; Hiroko Komiya in Tokyo at
To contact the editor responsible for this story: Garfield Reynolds at

Tuesday, 3 December 2013

Asian Stocks Outside Japan Fall on Fed Tapering Outlook

By Jonathan Burgos & Jasmine Ng - Dec 3, 2013 12:49 AM PT

Asian stocks fell, with the equity gauge excluding Japan heading for its first drop in eight days, as signs the U.S. economy is strengthening fueled speculation that the Federal Reserve will soon start tapering stimulus.
Newcrest Mining Ltd. (NCM)Australia’s biggest gold producer, sank 6.7 percent as bullion traded near a five-month low. Hyundai Motor Co., South Korea’s top carmaker, lost 4.2 percent as November sales fell. Sekisui Chemical Co. surged 7.5 percent inTokyo on a report it developed a material that triples the capacity of electric-vehicle batteries.
Dec. 3 (Bloomberg) -- Jack Ablin, the chief investment officer at BMO Private Bank in Chicago, talks about Federal Reserve policy, its implications for U.S. stocks, and investment strategy. He speaks with Mia Saini on Bloomberg Television's "First Up." (Source: Bloomberg)
The MSCI Asia Pacific ex-Japan Index dropped 0.6 percent to 471.85 as of 5:34 p.m. in Tokyo. The broader regional gauge lost 0.2 percent to 141.34, with eight of its 10 industry groups falling. More than $8 trillion has been added to the value of global equities this year, the most since 2009, as central banks took steps to shore up economies worldwide. U.S. stocks slid yesterday as investors weighed the impact stronger manufacturing data will have on Fed bond buying.
“Economic data over the past few weeks have been progressively coming in better and markets are now in the mood to put good economic news as bad news because that will bring forward any reduction in central-bank support,” Matthew Sherwood, head of investment markets research at Perpetual Ltd., which manages about $25 billion, said by telephone. “There might be a little bit of downward pressure this month.”

Regional Gauges

Hong Kong’s Hang Seng Index retreated 0.5 percent. South Korea’s Kospi index dropped 1.1 percent. Australia’s S&P/ASX 200 Index lost 0.4 percent, while New Zealand’s NZX 50 Index declined 0.2 percent. Taiwan’s Taiex index fell 0.3 percent.
Japan’s Nikkei 225 Stock Average rose 0.6 percent to the highest close since December 2007, while the Topix index gained 0.4 percent. Shares climbed as the yen fell to a six-month low against the dollar.
The FTSE Bursa Malaysia Index (FBMKLCI) gained 0.3 percent, heading for a record close. Tenaga Nasional Bhd. jumped by most in five years after the government allowed the electricity producer to raise prices. Singapore’s Straits Times Index rose 0.1 percent.
China’s Shanghai Composite Index advanced 0.7 percent. The nation’s non-manufacturing purchasing managers’ index fell to 56 last month from 56.3 in October, according to a report released today by the National Bureau of Statistics and the China Federation of Logistics and Purchasing. A reading above 50 indicates expansion.
Australia retail sales increased 0.5 percent in October from the previous month, beating economists estimates, while the current-account deficit for the third quarter widened more than forecast. The Reserve Bank of Australia kept its benchmark rate at a record-low 2.5 percent today, in line with the consensus view of all 30 economists surveyed byBloomberg News.

Relative Value

The Asia-Pacific equity index jumped 9.5 percent this year through yesterday amid signs the global economy is recovering. It traded at 14 times estimated earnings, the highest level since May, according to data compiled by Bloomberg. That compares with 16.3 on the Standard & Poor’s 500 Index last week and 15.2 for the Stoxx Europe 600 Index.
Futures (SPA) on the S&P 500 Index were little changed today. The U.S. equities benchmark index dropped 0.3 percent yesterday amid data that showed manufacturing unexpectedly climbed last month and retail spending fell on the weekend after Thanksgiving for the first time since 2009.
The U.S. Institute for Supply Management’s manufacturing index rose to 57.3 in November, a report yesterday showed, after economists surveyed by Bloomberg called for a drop to 55.1. Four of five investors surveyed last month saying they expect Federal Reserve policy makers to put off cuts to their $85 billion-a-month in bond purchases until March 2014 or later.

Gold Miners

Gold producers dropped after the bullion fell yesterday to the lowest close since June 27 and headed for for its first annual decline in 13 years. Newcrest dropped 6.7 percent to A$7.25. Zijin Mining Group Co., China’s largest producer of the precious metal, dropped 1.7 percent to HK$1.76 in Hong Kong.
Hyundai Motor sank 4.2 percent to 239,000 won in Seoul as falling car sales dampened the outlook for fourth-quarter earnings. Hyundai unit Kia Motors Corp. dropped 5.2 percent to 56,500 won.
Sekisui Chemical rose 7.5 percent to 1,298 yen in Tokyo. The Nikkei newspaper reported that the company developed a cheaper and longer-lasting material for lithium-ion batteries used in electric vehicles.
Tenaga Nasional surged 11 percent to 10.94 ringgit, heading for its biggest advance since June 2008. The government allowed the utility to increase electricity tariffs by an average 15 percent in Peninsular Malaysia.
To contact the reporters on this story: Jonathan Burgos in Singapore at; Jasmine Ng in Singapore at
To contact the editor responsible for this story: Sarah McDonald at

Dollar Rises to Six-Month High as Tapering Weighed Amid Recovery

By Kristine Aquino & David Goodman - Dec 3, 2013 12:29 AM PT

The dollar rose to its strongest level versus the yen in more than six months as investors weigh whether signs of a strengthening economy will be enough for the Federal Reserveto reduce currency-debasing stimulus measures.
The Bloomberg U.S. Dollar Index headed for its highest closing level in more than two months after a report yesterday showed manufacturing unexpectedly accelerated in November at the fastest pace since April 2011. A private survey tomorrow may show employers in the U.S. boosted jobs last month by the most since June. Australia’s dollar reached a five-year low versus its New Zealand counterpart as the larger nation’sReserve Bank said a weaker currency was needed for balanced growth.
Yen & U.S. Dollar The dollar was little changed at 102.95 yen as of 8:43 a.m. in Tokyo after touching 103.13 yesterday, the highest since May 23. Photographer: Yuriko Nakao/Bloomberg
Dec. 2 (Bloomberg) -- Neil Jones, head of European hedge-fund sales at Mizuho Bank Ltd., talks about the outlook for the yen and dollar. He spoke Nov. 29 in London. (Source: Bloomberg)
Dec. 2 (Bloomberg) -- Todd Elmer, head of Group-of-10 strategy for Asia ex-Japan at Citigroup Inc. in Singapore, talks about the yen, Bank of Japan monetary policy and the nation's economy. Elmer also discusses the outlook for the U.S. and Australian currencies and central bank policies. He speaks with Mia Saini on Bloomberg Television's "First Up." (Source: Bloomberg)
“U.S. data is going to keep driving the direction of the dollar,” said Yuji Kameoka, chief currency strategist inTokyo at Daiwa Securities Co., “Yesterday’s numbers have boosted the view that tapering could happen in December.”
The dollar gained 0.2 percent to 103.12 yen at 8:18 a.m. London time after earlier touching 103.38, the highest level since May 23. It was at $1.3554 per euro. The shared currency climbed 0.3 percent to 139.76 yen, after reaching 139.94, the highest since October 2008.
The Bloomberg U.S. Dollar Index, which tracks the currency against 10 major counterparts, was at 1,023.78, set for the highest close since Sept. 12. Currency volatility increased for a second day, with the JPMorgan Chase & Co. Group of Seven Volatility Index climbing to as high as 8.38 percent, the most since Oct. 11.

Dollar Strength

The dollar strengthened 3.9 percent this year against a basket of nine other developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The yen is the worst performer, having lost 14 percent. The euro was set for the biggest advance within the gauge, climbing 7.1 percent.
ADP Research Institute will say tomorrow companies in the U.S. added 170,000 positions in November, which would be the most in five months, according to the median estimate of economists surveyed by Bloomberg News.
The Institute for Supply Management’s non-manufacturing index tomorrow may indicate continued expansion in industries that make up almost 90 percent of the world’s biggest economy. A similar gauge for the manufacturing industry expanded to 57.3 in November, the highest since April 2011, from 56.4 a month earlier, the Tempe, Arizona-based group said yesterday. Readings above 50 indicate growth.
“While the U.S. data continue to print better, the dollar will be supported,” said Yuki Sakasai, a foreign-exchange strategist at Barclays Plc. in New York. “There’s a view in the market that the Fed might taper in December.”

Beige Book

The U.S. central bank is scheduled to release tomorrow its Beige Book business survey that provides policy makers with anecdotal accounts from the Fed districts two weeks before they meet to set monetary policy.
Officials will next gather on Dec. 17-18. They may reduce the central bank’s $85 billion in monthly bond purchases “in coming months” as the economy improves, according to minutes of their October meeting released last month.
Hedge funds and other large speculators are betting on declines in the euro for the first time since July, according to Commodity Futures Trading Commission data.
The difference in the number of wagers on a drop in the 17-nation currency compared with those on a gain -- so-called net shorts -- was 431 in the week ended Nov. 26, compared with a net long position of 8,911 in the previous period. Investors boosted bets on a slide in the yen to 123,202, the most since July 2007, according to CFTC figures.

‘Buying Interest’

“The current backdrop presents the scope for a valuation-driven pullback toward the channel base at 1.3471,” George Davis, chief technical analyst for fixed-income and currency strategy at Royal Bank of Canada, wrote in reference to the euro in an e-mailed note to clients yesterday. “While a daily close below this level would expose 1.3402 and 1.3314 via a bearish short-term trend reversal, we believe that pullbacks to these two levels will attract renewed buying interest.”
The euro gained for a ninth day against the yen, the longest winning streak in almost four years, as European Central Bank officials prepared to gather on Dec. 5 for their next policy meeting. They will keep the benchmark rate at a record-low 0.25 percent, another Bloomberg survey showed.
Australia’s dollar remained lower after the nation’s central bank held its benchmarkinterest rate at a record low of 2.5 percent, as forecast in a Bloomberg survey of economists.
The Aussie lost 0.1 percent to NZ$1.1110 after touching NZ$1.1096, the weakest since October 2008. It fell 0.1 percent to 90.98 U.S. cents.
To contact the reporters on this story: Kristine Aquino in Singapore at kaquino1@bloomberg.netDavid Goodman in London at
To contact the editor responsible for this story: Paul Dobson at