Currencies of commodity-exporting countries tumbled versus the U.S. dollar as speculation increased that China will take more measures to cool economic growth, curbing appetite for raw materials.
The U.S. currency extended gains versus most of its 16 major counterparts after jobless claims fell more than forecast for the latest week and existing home sales increased more than projected in December. South Africa’s rand and the New Zealand, Australian and Canadian dollars dropped as prices for crude oil, gold and copper slumped.
“The Chinese numbers were the catalyst for the risk-off day,” said Paresh Upadhyaya, head of Americas Group of 10 currency strategy at Bank of America Corp. in New York. “The concerns of further Chinese tightening gathered momentum and you saw the commodity bloc currencies come under pressure.”
The South African rand fell 1.2 percent to 7.0785 per dollar at 12:11 p.m. in New York, from 6.9931 yesterday. It touched 7.1127, the weakest since Dec. 1. New Zealand’s dollar dropped 1.6 percent to 75.67 U.S. cents and the Aussie lost 1.4 percent to 98.73 U.S. cents.
--Data give relatively robust picture of Swiss economy
--Strong SFR is a 'great burden' for parts of economy
--Eurozone will return to stability
--European debt crisis not over, uncertainty is high
After a brief breather, sellers have redoubled their efforts to take the Nasdaq to a new session low. Given the steepness of its slide both today and yesterday, the Nasdaq is on pace for its worst back-to-back performance since August.
The magnitude of the back-to-back selling suggests that something more than profit taking might be going on in the market. Stocks registered new two-year highs only two days ago, but in the stock market's ascent to that point pull backs were met with subsequent support.
Offers: $1.3520, $1.3545/50, $1.3570/80
Bids: $1.3420, $1.3400/395, $1.3360/50
Offers: Y83.00, Y83.15/20, Y83.70
Bids: Y81.80/00, Y81.50
"regional manufacturing activity continues to expand in January. All of the broad indicators remained positive this month and there was an apparent pickup in new orders and employment. Increases in input prices continue to be widespread this month, and more firms reported increases in prices for their manufactured goods. The survey's broad indicators of future activity suggest that firms expect a continued expansion in activity over the next six months." Diffusion index edges down but has been positive for four consecutive months. Labor mkt is improving.
U.S. stocks were poised for a flat open Thursday, despite a better-than-expected report on initial jobless claims, as investors await readings on housing and manufacturing.
On Wednesday, stocks ended lower, as weak results from tech shares took a drubbing and Goldman Sachs' disappointing results pressured financial issues. Shares of Goldman (GS), Bank of America (BAC), Morgan Stanley (MS) and Barclays (BCS) fell more than 3%.
Economy: The number of Americans filing for first-time unemployment insurance eased by 37,000 to 404,000 last week. The number was lower than forecast. Analysts surveyed by Briefing.com were expecting 425,000 jobless claims in the latest week.
After the opening bell, the National Association of Realtors will release its monthly report on existing home sales. Analysts polled by Briefing.com expect sales rose to an annual rate of 4.8 million in December, from 4.68 million the previous month.
The index of Leading Economic Indicators from the Conference Board is expected to have risen 0.6% in December after a 1.1% increase the previous month.
After the market opens, the Philadelphia Fed index, a regional reading on manufacturing, is expected to show that activity in that sector slowed in January.
Companies: Morgan Stanley (MS) posted fourth-quarter earnings of $1.1 billion, or 43 cents a share. Revenue rose 14% from a year earlier to $7.8 billion. Analysts expected the investment bank to report earnings per share of 35 cents on revenue of $7.35 billion. Shares of Morgan Stanley jumped 2% following the report.
After the market closed Wednesday, EBay (EBAY) said its fourth-quarter revenue rose 5% over the prior year to $2.5 billion. Net income rose to 42 cents a share, or $559.2 million. Shares of the retailer rose 3% in pre-market trading.
Google (GOOG) is scheduled to report fourth-quarter earnings results after the close of trading Thursday.
China's gross domestic product, the broadest measure of economic output, expanded at an annual rate of 9.8% in the fourth quarter of 2010. The rate was faster than the 9.6% rate reported in the prior quarter, according to the National Bureau of Statistics.
Meanwhile, inflation cooled -- with the nation's consumer price index rising 4.6% last month, compared to 5.1% in November.
China's rapid growth has sparked fears that its economy may overheat, and many economists are expecting China to further tighten its monetary policy and hike interest rates.
Oil for March delivery slipped 76 cents to $91.05 a barrel.
Gold futures for February delivery fell $12.60 to $1,357.60 an ounce.
Bonds: The price on the benchmark 10-year U.S. Treasury fell, pushing the yield up to 3.40% from 3.34% late Wednesday.
"encouraging are survey week comparisons in January vs. December- on the week 404K vs. 420K in December 18th week and the smoother 4-week average is 412K vs. 426K in the December 18th week."
Corrective pullback off earlier posted highs at $1.6010 extends to $1.5965, with rate currently trading back around $1.5975. Further demand seen placed between $1.5960/50, a break of $1.5945 to open a deeper move toward $1.5935/30. Offers remain in place to $1.6010 with stops above.
Squeezes back toward mentioned support at $1.3480, with traders noting directional sellers emerging on the move back below $1.3520, with similar sell interest seen in aussie and cable. A break and clear below $1.3480 to open a deeper move toward $1.3455/50, ahead of $1.3420.
Sales from real money accounts have just kicked aussie lower AUD/USD from $0.9945 to $0.9927, ahead of exporter bids $0.9915/25 and corporate demand $0.9880/9905. Aussie trades $0.9927.
07:00 Germany PPI (December) 0.7% 0.5% 0.2%
07:00 Germany PPI (December) Y/Y 5.3% 5.1% 4.4%
11:00 UK CBI industrial order books balance (January) -16% -3%
The Australian and New Zealand dollars declined against most of their major peers as speculation that China will take more measures to cool growth dented demand for higher-yielding currencies.
The U.S. currency and the yen strengthened as equity losses boosted demand for a refuge. Data showed China’s economic growth accelerated, adding to pressure for monetary tightening.
The dollar pared gains against the common currency before data that economists predict will show U.S. continuing jobless claims increased and home-sales growth slowed.
China’s economic growth quickened to an annual rate of 9.8% in the fourth quarter, up from 9.6% in the prior three months, the statistics bureau said. Consumer prices rose 4.6% in December from a year earlier, compared with 5.1% the previous month.
The People’s Bank of China will increase the key one-year lending rate to 6.81% from 5.81% this year and let the yuan strengthen about 6% against the dollar, Nomura Holdings Inc. forecast this week.
New Zealand’s dollar retreated from near the strongest this year. The government said consumer prices rose 2.3% in the fourth quarter from the previous three months, when they advanced 1.1% . Economists forecast 2.4% growth.
The euro gained against the pound and the yen as statistics showed German producer prices climbed at the fastest pace in seven months.
EUR/USD fell to $1.3417 after it failed to break above $1.3500 at first attempt. Later rate printed highs on Y1.3522.
GBP/USD rose from $1.5905 to $1.6010 before set stable within the $1.5970/$1.6000 range.
USD/JPY held within the narrow Y82.00/Y82.30 range.
US data starts at 1330GMT, when initial jobless claims are expected to fall 25,000 to 420,000 in the January 15 employment survey week after rising 35,000 in the previous week. Claims were at a level of 420,000 in the December 18 employment survey week.
EUR/JPY breaks through Y111.00/10 exporter orders. Clear break here through Y111.16 high of Tuesday opens up to Y111.95 high of Dec 17. Cross trades Y111.00/03
Good demand seen on USD/CAD, as rate gets an added push toward parity. Rate trades to C$0.9992, with rate retaining a firm tone. A break above C$1.0010 to open a move toward C$1.0030/35.
The Canadian dollar weakened for a second day after the Bank of Canada indicated future interest- rate increases are on hold because the nation’s economic recovery is threatened by the currency’s climb beyond parity.
“There had been a lot of speculation recently about a tightening, possibly as early as March,” Mathieu D’Anjou, a senior economist at Desjardins Group, said. “Given what the bank said yesterday, this seems much less probable now. The bank really doesn’t seem in a hurry to boost its target rate, and this has been putting pressure on the currency.”
The central bank predicted in its Monetary Policy Report released today a “modest” economic recovery hampered by a strong currency that limits exports. It said a “gradual” reduction of monetary stimulus through 2012 will keep inflation under control.
The yield on Canada’s 2-year note fell eight basis points to 1.69 percent, the biggest decline since Sept. 7.
Canadian Finance Minister Jim Flaherty’s decision Jan. 17 to tighten rules in an attempt to curb record household borrowing may allow the Bank of Canada to hold off on raising interest rates before May at the earliest, David Rosenberg, chief economist at Gluskin Sheff & Associates in Toronto, said in a note to clients today.
Canada’s gross domestic product will grow 2.4% this year and 2.8% in 2012, the Bank of Canada said yesterday, compared with an October forecast for gains of 2.3% this year and 2.6% next year.
Yesterday’s statement “was less hawkish than the market had anticipated, with the Bank of Canada highlighting an improved global economic outlook and a better growth profile for Canada,” Camilla Sutton, chief currency strategist at Bank of Nova Scotia’s Scotia Capital unit, wrote. “However, this was offset by the bank’s view that inflationary pressure remains subdued and the impact that a strong Canadian dollar has on restraining exports.”
GBP/USD back below $1.6000 but seen meeting demand interest placed toward $1.5980. Offers remain at $1.6010, with stops above. If stops triggered seen opening a move back toward $1.6040. Below $1.5980 opens a deeper move toward $1.5960/50.
Recovery strengthened by rising euro-dollar to $0.9962. Bids on AUD/USD from exporters remain in place $0.9915/25 with strong corporate demand also seen from $0.9905 down to $0.9880. Offers reportedly ahead at $0.9965/70 with stops through $0.9985/90. Aussie trades $0.9959/61
EUR/USD:$1.3400, $1.3450, $1.3500, $1.3550/55, $1.3600, $1.3315, $1.3300
USD/JPY: Y81.00, Y81.05, Y81.50, Y82.00, Y83.00, Y83.25
USD/CHF: Chf0.9500, Chf0.9570, Chf0.9645, Chf0.9655
AUD/USD: $1.0100, $1.0060, $1.0050, $1.0000, $0.9870
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