If DJIA were to recover, our FKLI shud be turning up ! Let's see how DJIA wud fare tonite. DJIA has been down 2 days almost 380 pts down. It shud pop up tonite !
Thursday, May 22, 2008
11:09 am - Dollar Falls for Third Day Against Yen as Oil Prices Surge
Dollar Falls for Third Day Against Yen as Oil Prices Surge
By Kosuke Goto and Yumi Teso
May 22 (Bloomberg) -- The dollar fell for a third day against the yen on speculation a surge in oil prices to a record will accelerate inflation while slowing economic growth in the U.S., the world's biggest oil importer.
The currency weakened to the lowest level in almost two weeks versus the yen and to a one-month low against the euro before a government report that will probably show falling U.S. house prices. The Australian dollar traded near its highest since being allowed to trade freely in 1983 as investors sought the nation's higher-yielding debt.
``The U.S. economy is vulnerable to surging oil prices,'' said Toru Umemoto, chief currency strategist in Tokyo at Barclays Capital, Britain's third-biggest lender. ``Stagflation risks in the U.S. are rising, buffeting the dollar.''
The dollar slid to 102.74 yen, the lowest level since May 12, before trading at 11:12 a.m. in Tokyo from 103.05 in New York yesterday. It also fell to $1.5801 per euro, the lowest level since April 24, before trading at $1.5791 from $1.5795. The euro fell to 162.35 yen from 162.76 yen.
The U.S. currency may weaken to $1.59 per euro and 101 yen in one month, Umemoto said.
The yen remained higher against the dollar after a Japanese government report showed export growth quickened in April. Overseas shipments, the driver of more than half of last quarter's expansion, rose 4 percent from a year earlier.
Pound, Franc
The dollar traded at $1.9733 against the British pound from $1.9732, and was at 1.0238 versus the Swiss franc from 1.0250. The Federal Reserve cut its 2008 economic growth projections to a range of 0.3 percent to 1.2 percent from its January forecast of 1.3 percent to 2 percent, according to minutes of its April meeting.
The Dollar Index traded on ICE futures in New York, which tracks the dollar against currencies of six trading partners, fell to 71.879, from 71.938 yesterday.
The Australian dollar climbed to as high as 96.54 U.S. yesterday, before trading at 96.39 cents, compared with 96.25 in New York yesterday. The Aussie has risen 9.6 percent this year, the second-biggest gainer among the 16 most-traded currencies.
A report from the Office of Federal Housing Enterprise Oversight today will show U.S. house prices fell 1.3 percent in the first quarter, according to the median forecast of 13 economists surveyed by Bloomberg.
The euro held gains after the price of crude oil increased to more than $135 a barrel and German business confidence unexpectedly rose, bolstering speculation the European Central Bank won't lower interest rates.
``As long as oil continues to go up, the ECB is going to preserve its hawkishness and is going to reduce any chance of them cutting rates,'' said Ashraf Laidi, chief currency analyst in New York at CMC Markets in a Bloomberg Television interview. ``That's why it's a direct positive for the euro.''
Fed Minutes
The dollar fell yesterday after minutes of the Fed's April meeting showed most policy makers viewed the decision to cut the benchmark interest rate to 2 percent as ``a close call,'' judging risks between weaker growth and faster inflation had become more balanced.
``Although the economy could do with some monetary help, the Fed is in a very tight bind as inflation picks up,'' said Shaun Osborne, chief currency strategist at TD Securities Inc. in Toronto.
The yield advantage of a two-year German bund over a comparable Treasury note rose to 1.72 percent, the most since April 9.
`Still Weakening'
``We'll see another leg of dollar weakness and will head toward $1.60,'' near the record low of $1.6019 per euro set on April 22, said Dustin Reid, a senior currency strategist at ABN Amro Bank NV in Chicago. ``The U.S. economy is still weakening.''
The correlation coefficient between oil prices and the euro-dollar exchange rate has been 0.95 for the past year, indicating they have moved in the same direction 95 percent of the time. The ECB has left its benchmark rate at a 6 1/2-year high of 4 percent since June and ECB President Jean-Claude Trichet said last month there is ``strong short-term upward pressure on inflation.''
Futures on the Chicago Board of Trade show traders see an 88 percent chance the Fed will keep its target rate for overnight lending between banks at 2 percent on June 25, down from a 94 percent chance one week ago. Traders also see a 21 percent chance the Fed will lift the target in September to 2.25 percent, down from a 29 percent chance a week earlier.
The euro may rise to $1.5850 against the dollar in one week, based on charts used to predict price movements, said Masashi Hashimoto, a senior currency analyst at Bank of Tokyo-Mitsubishi UFJ Ltd.
Technical Charts
The currency has held above so-called support at the 5-day and 21-day moving averages of $1.5663 and $1.5553, respectively, signaling further gains, Hashimoto said in Tokyo. Support is where buyers are expected to outweigh sellers.
The so-called resistance level of $1.5850 represents a 76.4 percent reversal of the euro's slide to a low of $1.5285 on May 8, from a record high of $1.6019 on April 22, based on a series of numbers known as the Fibonacci sequence. Resistance is a level where selling is expected to outweigh buying.
The yen gained against the Brazilian real and the South African rand, favorites of so-called carry trades, as a decline in stocks prompted investors to pare holdings of higher-yielding assets funded in the Japanese currency.
``Stocks may extend declines which translates into a stronger yen,'' said Hideki Hayashi, chief economist at Shinko Securities Co. in Tokyo. ``People are unwinding higher-yielding assets and their carry trades.''
The yen may strengthen to 102 per dollar this month, Hayashi said.
Carry Trades
The yen strengthened to 62.0165 against the Brazilian real, compared with 62.1795 yesterday in New York. It rose to 13.29973 per rand from 13.3239, as investors trimmed carry trades, in which they get funds in a nation with low rates and invest where returns are higher. The risk is currency swings erase profits.
One-month implied volatility for dollar-yen options rose to 12.7 percent today from 12.45 percent. Japan's 0.5 percent target lending rate compares with 11.75 percent in Brazil and 11.5 percent in South Africa. The MSCI Asia Pacific Index fell 0.8 percent today.
By Kosuke Goto and Yumi Teso
May 22 (Bloomberg) -- The dollar fell for a third day against the yen on speculation a surge in oil prices to a record will accelerate inflation while slowing economic growth in the U.S., the world's biggest oil importer.
The currency weakened to the lowest level in almost two weeks versus the yen and to a one-month low against the euro before a government report that will probably show falling U.S. house prices. The Australian dollar traded near its highest since being allowed to trade freely in 1983 as investors sought the nation's higher-yielding debt.
``The U.S. economy is vulnerable to surging oil prices,'' said Toru Umemoto, chief currency strategist in Tokyo at Barclays Capital, Britain's third-biggest lender. ``Stagflation risks in the U.S. are rising, buffeting the dollar.''
The dollar slid to 102.74 yen, the lowest level since May 12, before trading at 11:12 a.m. in Tokyo from 103.05 in New York yesterday. It also fell to $1.5801 per euro, the lowest level since April 24, before trading at $1.5791 from $1.5795. The euro fell to 162.35 yen from 162.76 yen.
The U.S. currency may weaken to $1.59 per euro and 101 yen in one month, Umemoto said.
The yen remained higher against the dollar after a Japanese government report showed export growth quickened in April. Overseas shipments, the driver of more than half of last quarter's expansion, rose 4 percent from a year earlier.
Pound, Franc
The dollar traded at $1.9733 against the British pound from $1.9732, and was at 1.0238 versus the Swiss franc from 1.0250. The Federal Reserve cut its 2008 economic growth projections to a range of 0.3 percent to 1.2 percent from its January forecast of 1.3 percent to 2 percent, according to minutes of its April meeting.
The Dollar Index traded on ICE futures in New York, which tracks the dollar against currencies of six trading partners, fell to 71.879, from 71.938 yesterday.
The Australian dollar climbed to as high as 96.54 U.S. yesterday, before trading at 96.39 cents, compared with 96.25 in New York yesterday. The Aussie has risen 9.6 percent this year, the second-biggest gainer among the 16 most-traded currencies.
A report from the Office of Federal Housing Enterprise Oversight today will show U.S. house prices fell 1.3 percent in the first quarter, according to the median forecast of 13 economists surveyed by Bloomberg.
The euro held gains after the price of crude oil increased to more than $135 a barrel and German business confidence unexpectedly rose, bolstering speculation the European Central Bank won't lower interest rates.
``As long as oil continues to go up, the ECB is going to preserve its hawkishness and is going to reduce any chance of them cutting rates,'' said Ashraf Laidi, chief currency analyst in New York at CMC Markets in a Bloomberg Television interview. ``That's why it's a direct positive for the euro.''
Fed Minutes
The dollar fell yesterday after minutes of the Fed's April meeting showed most policy makers viewed the decision to cut the benchmark interest rate to 2 percent as ``a close call,'' judging risks between weaker growth and faster inflation had become more balanced.
``Although the economy could do with some monetary help, the Fed is in a very tight bind as inflation picks up,'' said Shaun Osborne, chief currency strategist at TD Securities Inc. in Toronto.
The yield advantage of a two-year German bund over a comparable Treasury note rose to 1.72 percent, the most since April 9.
`Still Weakening'
``We'll see another leg of dollar weakness and will head toward $1.60,'' near the record low of $1.6019 per euro set on April 22, said Dustin Reid, a senior currency strategist at ABN Amro Bank NV in Chicago. ``The U.S. economy is still weakening.''
The correlation coefficient between oil prices and the euro-dollar exchange rate has been 0.95 for the past year, indicating they have moved in the same direction 95 percent of the time. The ECB has left its benchmark rate at a 6 1/2-year high of 4 percent since June and ECB President Jean-Claude Trichet said last month there is ``strong short-term upward pressure on inflation.''
Futures on the Chicago Board of Trade show traders see an 88 percent chance the Fed will keep its target rate for overnight lending between banks at 2 percent on June 25, down from a 94 percent chance one week ago. Traders also see a 21 percent chance the Fed will lift the target in September to 2.25 percent, down from a 29 percent chance a week earlier.
The euro may rise to $1.5850 against the dollar in one week, based on charts used to predict price movements, said Masashi Hashimoto, a senior currency analyst at Bank of Tokyo-Mitsubishi UFJ Ltd.
Technical Charts
The currency has held above so-called support at the 5-day and 21-day moving averages of $1.5663 and $1.5553, respectively, signaling further gains, Hashimoto said in Tokyo. Support is where buyers are expected to outweigh sellers.
The so-called resistance level of $1.5850 represents a 76.4 percent reversal of the euro's slide to a low of $1.5285 on May 8, from a record high of $1.6019 on April 22, based on a series of numbers known as the Fibonacci sequence. Resistance is a level where selling is expected to outweigh buying.
The yen gained against the Brazilian real and the South African rand, favorites of so-called carry trades, as a decline in stocks prompted investors to pare holdings of higher-yielding assets funded in the Japanese currency.
``Stocks may extend declines which translates into a stronger yen,'' said Hideki Hayashi, chief economist at Shinko Securities Co. in Tokyo. ``People are unwinding higher-yielding assets and their carry trades.''
The yen may strengthen to 102 per dollar this month, Hayashi said.
Carry Trades
The yen strengthened to 62.0165 against the Brazilian real, compared with 62.1795 yesterday in New York. It rose to 13.29973 per rand from 13.3239, as investors trimmed carry trades, in which they get funds in a nation with low rates and invest where returns are higher. The risk is currency swings erase profits.
One-month implied volatility for dollar-yen options rose to 12.7 percent today from 12.45 percent. Japan's 0.5 percent target lending rate compares with 11.75 percent in Brazil and 11.5 percent in South Africa. The MSCI Asia Pacific Index fell 0.8 percent today.
9:10 am - FKLI next level of support at 1260-1266
FKLI were to go down, look to buy at 1260-1266.0. Crude oil is up almost USD4 at all time high USD134, our plantation stocks wud hold up nicely.
9:05 am - FKLI finally gap down after DJIA -1.77% drop
FKLI put a strong fight yesterday and the rest of the regional market too. FKLI finally has to follow the DJIA. It is difficult to trade FKLI now.
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