(Reuters) - The dollar dipped against the euro on Thursday after subdued U.S. inflation supported the Federal Reserve's case for quantitative easing, while Asian equities stabilized after an eight-day sell-off.
Hopes that Ireland will soon see a solution to its debt crisis supported stocks, which have been dogged by uncertainty about how Europe would tackle Ireland's debt woes and fears that China may take aggressive steps to curb inflation.Such factors had helped exacerbate a recent sell-off in risky assets and a short-covering rally in the dollar that traders say is partly due to investors trimming their bets before market liquidity dwindles toward the year-end.
The euro and Asian equities gained some respite after Ireland agreed to work with EU and IMF officials on steps to shore up its shattered banking sector.
The MSCI index of Asia-Pacific stocks outside Japan .MIAPJ0000PUS rose 0.2 percent to 457.50.
The index had fallen for eight sessions, shedding 5.7 percent. It is still not far from its highest in more than two years hit in early November after the Federal Reserve unveiled its $600 billion bond buying scheme.
* Australian shares .AXJO edged up 0.1 percent in mixed trade, supported by gains in retailer David Jones (DJS.AX) after positive sales, and Atlas Iron (AGO.AX) after it announced rail talks with BHP Billiton (BHP.AX). .AX
Japan's Nikkei average .N225 rose 0.9 percent. Among the leading gainers were financial stocks, which have been among the worst performers this year. The banking sector sub-index rose 2.6 percent .IBNKS.T, adding to its rally over the past week.
The euro rose 0.2 percent to $1.3554, pulling away from a seven-week trough of $1.3446 hit on Tuesday on trading platform EBS.
The dollar index, which measures its value against a basket of major currencies, stood at 78.962 .DXY, having retreated from Tuesday's seven-week high of 79.461.
The dollar's retreat followed news that the U.S. core consumer prices rose just 0.6 percent in October from a year earlier, the smallest rise in records kept since 1957.
By Masayuki Kitano
Kamis, 18 November 2010
Senin, 15 November 2010
G-20, APEC Yield Little to Fix Imbalances, Stem Inflow Concerns
Leaders of the world’s biggest economies ended four days of talks without taking decisive measures to address the global imbalances that have fueled asset bubbles and risk leading to a protectionist backlash.
Asia-Pacific leaders yesterday in Japan pledged to take “concrete steps” toward creating a regional free-trade agreement without setting a target for achieving that goal. Their meeting followed the Nov. 11-12 Group of 20 summit in Seoul that “opposed protectionist trade actions” while failing to agree on a remedy for trade and investment distortions. Officials went into the G-20 vowing to reduce global trade friction by agreeing to avoid weakening their currencies to boost exports. Once there, the U.S. and China took turns blaming the other’s foreign exchange policy, with President Barack Obama calling the yuan “undervalued” and Chinese officials saying the Federal Reserve’s monetary easing was undermining the dollar. “The problem that people really were concerned about, the effects of U.S. monetary policy in terms of capital flows, was barely addressed at all,” said Uwe Parpart, chief economist and strategist for Asia at Cantor Fitzgerald HK Capital Markets. A solution that doesn’t involve China boosting domestic demand and the U.S. increasing savings “deals with symptoms, not the real cause,” he said.
Hu indicated no change in his country’s currency policy in a Nov. 13 speech, adding that pressure for quick reforms “will do no good to international cooperation.” The same day, National Security Adviser Thomas Donilon told reporters that the U.S. wants China to let the yuan rise more before Hu visits Washington in January.
Trip Ends
Obama flew home yesterday after a 10-day trip aimed at supporting his goal of doubling exports in five years. He pressed Hu on allowing the yuan to strengthen during an 80- minute meeting on Nov. 11 as China’s record $28 billion trade surplus with the U.S. in August heightened criticism its government maintains an unfair cap on the currency.
The yuan, also known as the renminbi, has risen about 3 percent against the dollar since June 19, when China scrapped its two-year peg. China has $2.65 trillion of foreign currency reserves, more than double any other country.
“The pressure from the U.S. is most likely to result in none too subtle threats about the dollar’s reserve status," Paul
Donovan, deputy head of global economics at UBS AG, said in an e-mail yesterday. ‘‘It is unlikely to speed up the process of renminbi revaluation."
Boost Growth
Obama told reporters after the G-20 that the Federal Reserve’s plan to buy an additional $600 billion of Treasuries was designed to boost growth. He said a stronger economy would help the U.S. cut a budget deficit that reached $1.294 trillion in the fiscal year that ended Sept. 30, second only to the $1.415 trillion shortfall in 2009.
The G-20 statement said emerging markets facing a surge of capital inflows can adopt regulatory steps to cope, offering them cover to limit currency swings and stem asset bubbles. Finance ministers from the G-20 will work next year on a set of so-called indicative guidelines designed to identify large economic imbalances and actions needed to fix them, the leaders said in a statement.
‘‘The decision to create a framework is a useful step as it can show the relative significance of individual country imbalances and provide an indication of where adjustments should take place,’’ Philippine central bank Governor Amando Tetangco said in a mobile phone message yesterday.
APEC Meeting
Leaders of APEC’s 21 economies, which account for more than 50 percent of the global economy and almost 45 percent of its trade, said the region ‘‘is recovering from the recent economic and financial crisis, but uncertainty remains.’’ Echoing the G-20 statement, the group called for greater currency flexibility and warned against volatile movement in the foreign exchange market that can disrupt economic growth.
‘‘We will move toward more market-determined exchange rate systems’’ and ‘‘refrain from competitive devaluation of currencies,’’ the statement said. Advanced countries will be vigilant to ‘‘help mitigate the risk of excessive volatility in capital flows facing some emerging market economies.’’
‘‘The APEC meeting was overshadowed by G-20, where countries were divided over the yuan and other currency policies,’’ said Koji Murata, professor of international relations at Doshisha University in Kyoto. ‘‘The result was vague and lacking substance.’’
Trade Talks
The U.S. pushed for the completion of the nine-country Trans-Pacific Partnership by next year’s APEC meeting in Honolulu, Trade Representative Ron Kirk said yesterday in an interview in Yokohama, Japan. That would lay the groundwork for a wider agreement that may include China, he said.
Obama on Nov. 13 said he ‘‘very much welcomed’’ Japan’s interest in joining talks on the TPP, which would be the largest U.S. trade accord since the 1994 North American Free Trade Agreement with Canada and Mexico. The talks now include the U.S., Australia, Singapore, New Zealand, Brunei, Chile, Vietnam, Peru, and Malaysia.
Japanese Prime Minister Naoto Kan, who favors joining the TPP talks, faces resistance from his own party amid a backlash from farmers who benefit from tariff protection. His Cabinet last week agreed only to begin preliminary discussions on the negotiations.
‘‘We just want to keep our foot to the pedal and see how far we can get to closure by the time we convene next year,’’ Kirk said, adding that five rounds of talks are scheduled for 2011. ‘‘What we are ultimately creating will become the Free- Trade Agreement of the Asia-Pacific.By Daniel Ten Kate and Sachiko Sakamaki - Nov 14, 2010 10:00 PM GMT+0700
Asia-Pacific leaders yesterday in Japan pledged to take “concrete steps” toward creating a regional free-trade agreement without setting a target for achieving that goal. Their meeting followed the Nov. 11-12 Group of 20 summit in Seoul that “opposed protectionist trade actions” while failing to agree on a remedy for trade and investment distortions. Officials went into the G-20 vowing to reduce global trade friction by agreeing to avoid weakening their currencies to boost exports. Once there, the U.S. and China took turns blaming the other’s foreign exchange policy, with President Barack Obama calling the yuan “undervalued” and Chinese officials saying the Federal Reserve’s monetary easing was undermining the dollar. “The problem that people really were concerned about, the effects of U.S. monetary policy in terms of capital flows, was barely addressed at all,” said Uwe Parpart, chief economist and strategist for Asia at Cantor Fitzgerald HK Capital Markets. A solution that doesn’t involve China boosting domestic demand and the U.S. increasing savings “deals with symptoms, not the real cause,” he said.
Hu indicated no change in his country’s currency policy in a Nov. 13 speech, adding that pressure for quick reforms “will do no good to international cooperation.” The same day, National Security Adviser Thomas Donilon told reporters that the U.S. wants China to let the yuan rise more before Hu visits Washington in January.
Trip Ends
Obama flew home yesterday after a 10-day trip aimed at supporting his goal of doubling exports in five years. He pressed Hu on allowing the yuan to strengthen during an 80- minute meeting on Nov. 11 as China’s record $28 billion trade surplus with the U.S. in August heightened criticism its government maintains an unfair cap on the currency.
The yuan, also known as the renminbi, has risen about 3 percent against the dollar since June 19, when China scrapped its two-year peg. China has $2.65 trillion of foreign currency reserves, more than double any other country.
“The pressure from the U.S. is most likely to result in none too subtle threats about the dollar’s reserve status," Paul
Donovan, deputy head of global economics at UBS AG, said in an e-mail yesterday. ‘‘It is unlikely to speed up the process of renminbi revaluation."
Boost Growth
Obama told reporters after the G-20 that the Federal Reserve’s plan to buy an additional $600 billion of Treasuries was designed to boost growth. He said a stronger economy would help the U.S. cut a budget deficit that reached $1.294 trillion in the fiscal year that ended Sept. 30, second only to the $1.415 trillion shortfall in 2009.
The G-20 statement said emerging markets facing a surge of capital inflows can adopt regulatory steps to cope, offering them cover to limit currency swings and stem asset bubbles. Finance ministers from the G-20 will work next year on a set of so-called indicative guidelines designed to identify large economic imbalances and actions needed to fix them, the leaders said in a statement.
‘‘The decision to create a framework is a useful step as it can show the relative significance of individual country imbalances and provide an indication of where adjustments should take place,’’ Philippine central bank Governor Amando Tetangco said in a mobile phone message yesterday.
APEC Meeting
Leaders of APEC’s 21 economies, which account for more than 50 percent of the global economy and almost 45 percent of its trade, said the region ‘‘is recovering from the recent economic and financial crisis, but uncertainty remains.’’ Echoing the G-20 statement, the group called for greater currency flexibility and warned against volatile movement in the foreign exchange market that can disrupt economic growth.
‘‘We will move toward more market-determined exchange rate systems’’ and ‘‘refrain from competitive devaluation of currencies,’’ the statement said. Advanced countries will be vigilant to ‘‘help mitigate the risk of excessive volatility in capital flows facing some emerging market economies.’’
‘‘The APEC meeting was overshadowed by G-20, where countries were divided over the yuan and other currency policies,’’ said Koji Murata, professor of international relations at Doshisha University in Kyoto. ‘‘The result was vague and lacking substance.’’
Trade Talks
The U.S. pushed for the completion of the nine-country Trans-Pacific Partnership by next year’s APEC meeting in Honolulu, Trade Representative Ron Kirk said yesterday in an interview in Yokohama, Japan. That would lay the groundwork for a wider agreement that may include China, he said.
Obama on Nov. 13 said he ‘‘very much welcomed’’ Japan’s interest in joining talks on the TPP, which would be the largest U.S. trade accord since the 1994 North American Free Trade Agreement with Canada and Mexico. The talks now include the U.S., Australia, Singapore, New Zealand, Brunei, Chile, Vietnam, Peru, and Malaysia.
Japanese Prime Minister Naoto Kan, who favors joining the TPP talks, faces resistance from his own party amid a backlash from farmers who benefit from tariff protection. His Cabinet last week agreed only to begin preliminary discussions on the negotiations.
‘‘We just want to keep our foot to the pedal and see how far we can get to closure by the time we convene next year,’’ Kirk said, adding that five rounds of talks are scheduled for 2011. ‘‘What we are ultimately creating will become the Free- Trade Agreement of the Asia-Pacific.By Daniel Ten Kate and Sachiko Sakamaki - Nov 14, 2010 10:00 PM GMT+0700
Euro burdened by Ireland as dollar gets lift from yields
(Reuters) - The U.S. dollar clung to recent gains on Monday as confusion over aid for Ireland and concerns about a prospective tightening in China kept the euro and higher-yielding currencies on the defensive.
The dollar has also benefited from a sharp rise in U.S. Treasury yields as a run of better economic data led investors to toy with the idea of a sustainable recovery. The U.S. two-year swap rate jumped almost 18 basis points last week to 0.70 percent, the highest in two-months.
"The dollar's relatively impressive performance comes before the Fed has even put one dollar's worth of QE2 to practical work, so some cautionregarding the sustainability of this USD rebound remains warranted," wrote analysts at TD Securities in a note to clients.
"But we wonder whether the past week's price action indicated that USD sentiment was on the cusp of a significant trend change from a technical perspective," they added.
The euro's losses last week tended to suggest that the underlying medium-term trend higher had lost significant momentum and TD saw significant resistance now in the $1.4050/1.4150 range into year-end.
On Monday, the single currency was hovering at $1.3685, having edged up from an early $1.3655 on bids from a U.S. bank. It had traded as low as $1.3573 on Friday before talk of an EU aid package for Ireland lifted it as far as $1.3777.
However, while EU officials have said a deal for Ireland was being discussed, the Irish government itself said it had not made an application for assistance.
The dollar has also benefited from a sharp rise in U.S. Treasury yields as a run of better economic data led investors to toy with the idea of a sustainable recovery. The U.S. two-year swap rate jumped almost 18 basis points last week to 0.70 percent, the highest in two-months.
"The dollar's relatively impressive performance comes before the Fed has even put one dollar's worth of QE2 to practical work, so some cautionregarding the sustainability of this USD rebound remains warranted," wrote analysts at TD Securities in a note to clients.
"But we wonder whether the past week's price action indicated that USD sentiment was on the cusp of a significant trend change from a technical perspective," they added.
The euro's losses last week tended to suggest that the underlying medium-term trend higher had lost significant momentum and TD saw significant resistance now in the $1.4050/1.4150 range into year-end.
On Monday, the single currency was hovering at $1.3685, having edged up from an early $1.3655 on bids from a U.S. bank. It had traded as low as $1.3573 on Friday before talk of an EU aid package for Ireland lifted it as far as $1.3777.
However, while EU officials have said a deal for Ireland was being discussed, the Irish government itself said it had not made an application for assistance.
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