JGBs gain; curve flattens ahead of month’s end

July 28, 2010 By Leave a Comment

TOKYO, July 27 (Reuters) – Japanese government bonds gained on Tuesday, with futures climbing towards a seven-year peak, as investor purchases of superlongs before the month’s end added to a flattening in the yield curve.

A 2.6 trillion yen ($29.9 billion) auction of two-year government debt attracted solid demand, with the market increasingly secure in the view that the Bank of Japan will either keep rates low for the foreseeable future or ease monetary policy further.

The 0.2 percent coupon auction produced the highest bid-to-cover ratio in five years, at 5.67 from 4.31 at the last sale in June. [ID:nMOFG15004]

“The higher-than-expected lowest price at the auction suggests investors bid directly in the primary market instead of going through brokerages,” said Keiko Onogi, a senior JGB strategist at Daiwa Securities Capital Markets.

“It reflects deepening easing expectations, enhanced after the Fed’s stance last week.”

The market is focused on an uncertain outlook for the global economy now that Europe’s bank stress tests are out of the way.

Fewer-than-expected banks failed the stress tests but the JGB market reaction was limited with concerns about the banking system remaining amid criticism the tests may have been too lax.

Indicators in focus include U.S. June durable goods orders due on Wednesday and second quarter GDP on Friday.

Federal Reserve Chairman Ben Bernanke fuelled speculation of further easing last week when he said the U.S. economy faced “unusually uncertain” prospects, and Treasuries rallied with the 10-year note yield US10YT=RR falling to a 15-month low.

Market players said how Treasuries fare may be key for the JGB market.

“Treasuries are holding firm considering that U.S. stocks are doing relatively well, supported by prospects for further easing,” said Makoto Noji, a senior market analyst at Mizuho Securities.

“How Treasuries perform will be key, as a rise in U.S. long-term rates may drive the yen lower (against the dollar) and in turn lift stocks and hurt JGBs. On the other hand, a further decline in U.S. long-term rates would have the opposite effect.”

September 10-year futures 2JGBv1 gained 0.12 point to 141.86 after hitting a seven-year peak of 142.08 last week.

Trade in futures was thin at around 18,800 lots, compared to last week’s daily average of 23,300 lots.

The five-year yield JP5YTN=JBTC edged down 0.5 basis point to 0.345 percent.

The benchmark 10-year yield JP10YTN=JBTC fell 1 basis point to 1.050 percent, edging closer to a seven-year low of 1.045 percent hit last week.

The 20-year yield dropped 2.5 basis points to 1.745 percent.

Purchases by index-following pension funds pulled down superlong yields, said a dealer at a foreign securities house.

The five-year/20-year yield spread tightened by 2 basis points to 140 basis points, its flattest in a year.

Duration extensions by index players at the month’s end have added to flattening pressure on the yield curve, as investors like domestic banks buy more superlongs for their higher returns. (Editing by Edwina Gibbs)

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FOREX-Euro inches higher, hovers near 2-mth peak

July 28, 2010 By Leave a Comment

TOKYO, July 27 (Reuters) – The euro ticked up towards a two-month peak above $1.3000 on Tuesday, although traders were cautious about bidding it up too much as they await clarity on Deutsche Bank’s exposure to euro zone sovereign debt.

Deutsche (DBKGn.DE) posted second-quarter pretax profit in line with expectations but it has not revealed its exposure to European sovereign debt following tests to see how well banks in the region would stand up to financial shocks. [ID:nLDE66Q07V] [ID:nLDE66P1X4]

Some traders said that if the bank gives details and there are no shocks, that could help build more confidence in euro zone banks and trigger buying in the euro.

In that case, the single currency’s next target would be last week’s two-month high of $1.3029 EUR= and then $1.3125, a 38.2 percent retracement of its December-June fall, technical analysts said.

“Despite all the negative talk about the stress test results, German interest rates are rising and the euro firmed, which seems to suggest lingering euro short-covering needs,” said Osamu Takashima, chief FX strategist at Citibank in Tokyo.

The euro rallied on Monday on relief the tests were over, although concerns they were not rigorous enough mean investors are still hesitant to make big bets on it, while some traders say euro zone debt redemptions this week could also constrain it.

Citi estimates there are some 45 billion euros worth of maturing bonds and coupon payments this week. [ID:nLDE66M1PR]

The euro rose 0.1 percent to $1.3009 EUR=. It climbed as high as $1.3019 earlier. Any fall was seen likely to be limited while it remained above support at $1.2870 — its 100-day moving average — and last week’s low around $1.2730.

The euro gained 0.2 percent to 113.11 yen EURJPY=. It has met stiff resistance at 113.30-50 in the past two weeks, partly on selling by Japanese exporters.

But Takashima said it was likely to rise above 113 yen.

“It’s true Japanese exporters were lowering their target price to around 113 yen from 118 yen. But looking at trade data, exports to Europe are stagnating, which points to limited selling by exporters,” he said.

The Aussie was steady on the day at $0.9021 AUD=D4, after rising 0.9 percent on Monday as investor risk appetite revived after the stress test results.

Chartwise it could be set to rise against the yen. On the daily Ichimoku chart for Aussie/yen, the tenkan sen has risen above the kijun sen line, in a bullish signal.

The top of the Ichimoku cloud now lies roughly around 80 yen, and a rise above that level would be another bullish sign.

“I think investors will tiptoe back into high-yielders as worries about Europe will gradually subside,” said a trader at a Japanese brokerage house.

The U.S. dollar gained 0.1 percent against the yen to 86.97 yen JPY=, though it was capped by offers around 87 yen from Japanese exporters. (Additional reporting by Reuters FX Analyst Krishna Kumar in Sydney; Editing by Joseph Radford)

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FOREX-Euro stalls near 2-mth peak, Deutsche Bank in focus

July 28, 2010 By Leave a Comment

TOKYO, July 27 (Reuters) – The euro ticked up towards a two-month peak above $1.3000 on Tuesday, although traders were cautious about bidding it up too much as they await clarity on Deutsche Bank’s (DBKGn.DE) exposure to euro zone sovereign debt.

Deutsche Bank has not revealed its exposure to euro zone sovereign debt following tests to see how well banks in the region would stand up to financial shocks. [ID:nLDE66P1X4]

It is expected to disclose more when it reports earnings later on Tuesday, which some traders said, if there are no shocks, could build more confidence in euro zone banks and trigger buying in the euro.

In that case, the euro’s next target would be last week’s two-month high of $1.3029 EUR= and then $1.3125, a 38.2 percent retracement of its December-June fall, technical analysts said.

“Despite all the negative talk about the stress test results, German interest rates are rising and the euro firmed, which seems to suggest lingering euro short-covering needs,” said Osamu Takashima, chief FX strategist at Citibank in Tokyo.

The euro rallied on Monday on relief the tests were over, although concerns they were not rigorous enough mean investors are still hesitant to make big bets on it, while some traders say euro zone debt redemptions this week could also constrain it.

Citi estimates there are some 45 billion euros worth of maturing bonds and coupon payments this week. [ID:nLDE66M1PR]

The euro was flat on the day at $1.2995 EUR= after ticking above $1.30 earlier. It rose about 0.6 percent on Monday.

Any fall was seen as limited while it remained above support at $1.2870 — its 100-day moving average — and last week’s low around $1.2730.

The euro gained 0.1 percent to 112.96 yen EURJPY=. It has met stiff resistance at 113.30-50 in the past two weeks, partly on selling by Japanese exporters.

But Takashima said it was likely to rise above 113 yen.

“It’s true Japanese exporters were lowering their target price to around 113 yen from 118 yen. But looking at trade data, exports to Europe are stagnating, which points to limited selling by exporters,” he said.

The euro also strengthened 0.2 percent against the Aussie, which softened after hitting a 2 1/2-month high against the U.S. dollar in the previous session.

The Aussie tends to gain with when investors are more risk tolerant but a fall in Shanghai share prices on worries about possible losses in local banks lending to local governments and property sapped its strength. [ID:nTOE66Q003] [ID:nTOE66P032]

The euro fetched A$1.4411 EURAUD=R, about a cent above a double-bottom around A$1.4320 formed this month.

But it needs to clear A$1.5143 to end a downtrend in place since late 2008, technical analysts at RBC Capital Markets said in report.

The Aussie was steady on the day at $0.9016 AUD=D4, after rising the most among major currencies on Monday as investor risk appetite revived after the stress test results.

But chartwise it could be set to rise against the yen. Its Ichimoku charts showing the pair’s tenkan sen line rises above kijun sen line, a bullish signal.

A rise above 79.97 yen within the next three weeks will put the currency above the Ichimoku cloud, another strong buy signal.

“I think investors will tiptoe back into high-yielders as worries about Europe will gradually subside,” said a trader at a Japanese brokerage house.

The U.S. dollar gained 0.1 percent against the yen to 86.95 yen JPY=, though it was capped by offers around 87 yen from Japanese exporters.

The British pound held at $1.5490, below a three-month peak of $1.5521 hit on Monday GBP=D4.

Sterling faces several targets at $1.5555, which is its 200-day moving average and the 50 percent retracement of its decline from November to May. (Contributiong by Reuters Analyst Krishna Kumar in Sydney; Editing by Charlotte Cooper)

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German Bund futures up 1/2 point at 129.81

July 6, 2010 By Leave a Comment

July 5 (Reuters) – German Bund futures were up half a point on the day at a session peak of 129.81 on Monday as worries swirled about a double-dip recession in the United States and Europe following poor non-farm payrolls data Friday.

But the gains were exaggerated by anaemic volumes in the midst of a U.S. market holiday and a lack of investors in the summer period.

“The focus remains on the double-dip recession expectations for the world economy, although the moves are totally exaggerated by thin volumes,” said Marc Ostwald, a bond strategist at Monument Securities in London.

By 0748 GMT, the September Bund future FGBLc1 was up 42 ticks on the day at 129.73, and shy of resistance at 129.86, the June 29 high. (Reporting by George Matlock)

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Nikkei rises 0.7 percent as consumer lenders soar

July 6, 2010 By Leave a Comment

(Reuters) – Japan’s Nikkei edged higher on Monday, with short-covering in exporters emerging after the benchmark marked its worst week in over a month and as a key retracement level continued to provide support.

Shares of consumer lenders such as Acom Co (8572.T) sky-rocketed, with many jumping by nearly a fifth in value after the Mainichi newspaper said Osaka prefecture may set up a special financial zone where tough new lending rules would be eased.

The market shrugged off U.S. nonfarm payrolls data that showed a loss of 125,000 jobs in June and a drop in the unemployment rate to 9.5 percent, the lowest level since July 2009, with charts showing the benchmark oversold.

In thin trade, the Nikkei rose further above support at 9,200, roughly a 50 percent retracement of the move up from its March 2009 low to its high in April.

“We’re seeing a bit of short-covering now that we’re past the jobs data, but the market is going to want to see a lot of the other indicators coming up this week, including those linked to consumer spending,” said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Morgan Stanley Securities.

“But if we can close above 9,200 for three straight days — Friday, today and tomorrow — we might even see a little bit of a rebound later this week.”

But others said gains were likely to be limited to Monday.

“Knowing that U.S. markets are shut today is giving some investors the assurance to buy, but we could well see a test of support at 9,076 later this week,” said Hideki Horikawa, a senior adviser at Himawari Securities.

The benchmark Nikkei .N225 rose 0.7 percent or 63.07 points to 9,266.78, while the broader Topix gained 0.7 percent to 836.89.

The Nikkei last week lost 5.5 percent, a decline that market players said underscored its oversold condition.

The Nikkei’s slow stochastic, a measure of how oversold the market is and whether it is in a short-term up or down trend, is deep in oversold territory but pointing slightly up, while its MACD, a measure of market momentum, is falling.

Its RSI is at 34, hovering near a six-week low. A figure of 30 or below would indicate that the Nikkei is in oversold territory. It is also just a bit above its lower Bollinger Band, indicating its short-term downtrend is slightly overstretched.

But there are a large number of option triggers on Nikkei futures at 9,000 and 8,500, and Horikawa said the market remains gamma short — meaning that traders need to follow market moves to hedge their books, often leading to volatile moves.

Orders placed through foreign securities houses before the start of trade showed foreign brokers were net buyers for the first time since June 21, but the amount was only 300,000 shares.

Market players said there were few signs of foreigners in the market, noting that U.S. markets are closed on Monday for a holiday, though some said the longer-term picture is not overly bleak.

“There’s a very small chance that the global economy will take a drastic turn for the worse under the current circumstances, unless something huge happens, for instance some big European bank goes under and that freezes money flows again,” said Masaru Hamasaki, a senior strategist at Toyota Asset Management.

“Many in the market had already expected economic stimulus measures taken around the world would peak out around midyear. Once the market calms down and reality starts to be reflected in stock prices, the Nikkei could return to the 10,000 level.”

Trade was thin, with some 1.4 billion shares changing hands on the Tokyo exchange’s first section, not far from the four-month low marked last Monday. Advancing stocks outnumbered declining ones by nearly 3 to 1.

CONSUMER LENDERS

Shares of Acom shot up 26.2 percent to 1,444 yen. Promise Co (8574.T) gained 17.1 percent to 685 yen and Takefuji Corp (8564.T) jumped 17.8 percent to 298 yen, bouncing back from a record low hit last week.

Consumer lenders, which offer unsecured loans to individuals and small business owners, have been struggling for survival amid a shrinking market and stricter lending regulations.

Shares of exporters gained broadly after many fell to multimonth lows last week, with the dollar climbing further above a seven-month trough against the yen, on demand from Japanese importers.

Sanyo Electric (6764.T) climbed 3.5 percent to 118 yen after sources said on Friday the company is close to finalizing the sale of its chip unit to ON Semiconductor (ONNN.O), its latest move to shed noncore businesses to focus more on promising areas.

But shares of Fast Retailing (9983.T) slumped 1.8 percent to 13,190 yen after the company said on Friday that same-store sales at its Uniqlo casual-clothing chain fell 5.8 percent in June from a year earlier, the first year-on-year decline in two months.

Nomura Securities downgraded its rating on the firm to “neutral” from “buy,” citing falling domestic sales growth and its possible impact on earnings over the short-term.

(Editing by Chris Gallagher)

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Nikkei rises 0.7 pct; consumer lenders soar

July 6, 2010 By Leave a Comment

TOKYO, July 5 (Reuters) – Japan’s Nikkei edged higher on Monday, with short-covering in exporters emerging after the benchmark marked its worst week in over a month and as a key retracement level continued to provide support.

Shares of consumer lenders such as Acom Co (8572.T) sky-rocketed, with many jumping by nearly a fifth in value after the Mainichi newspaper said Osaka prefecture may set up a special financial zone where tough new lending rules would be eased.

The market shrugged off U.S. nonfarm payrolls data that showed a loss of 125,000 jobs in June and a drop in the unemployment rate to to 9.5 percent, the lowest level since July 2009, with charts showing the benchmark oversold. [ID:nN01165161]

In thin trade, the Nikkei rose further above support at 9,200, roughly a 50 percent retracement of the move up from its March 2009 low to its high in April.

“We’re seeing a bit of short-covering now that we’re past the jobs data, but the market is going to want to see a lot of the other indicators coming up this week, including those linked to consumer spending,” said Nagayuki Yamagishi, a strategist at Mitsubishi UFJ Morgan Stanley Securities.

“But if we can close above 9,200 for three straight days — Friday, today and tomorrow — we might even see a little bit of a rebound later this week.”

But others said gains were likely to be limited to Monday.

“Knowing that U.S. markets are shut today is giving some investors the assurance to buy, but we could well see a test of support at 9,076 later this week,” said Hideki Horikawa, a senior adviser at Himawari Securities.

The benchmark Nikkei .N225 rose 0.7 percent or 63.07 points to 9,266.78, while the broader Topix gained 0.7 percent to 836.89.

The Nikkei last week lost 5.5 percent, a decline that market players said underscored its oversold condition.

The Nikkei’s slow stochastic, a measure of how oversold the market is and whether it is in a short-term up or down trend, is deep in oversold territory but pointing slightly up, while its MACD, a measure of market momentum, is falling.

Its RSI is at 34, hovering near a six-week low. A figure of 30 or below would indicate that the Nikkei is in oversold territory. It is also just a bit above its lower Bollinger Band, indicating its short-term downtrend is slightly overstretched.

But there are a large number of option triggers on Nikkei futures at 9,000 and 8,500, and Horikawa said the market remains gamma short — meaning that traders need to follow market moves to hedge their books, often leading to volatile moves.

Orders placed through foreign securities houses before the start of trade showed foreign brokers were net buyers for the first time since June 21, but the amount was only 300,000 shares.

Market players said there were few signs of foreigners in the market, noting that U.S. markets are closed on Monday for a holiday, though some said the longer-term picture is not overly bleak.

“There’s a very small chance that the global economy will take a drastic turn for the worse under the current circumstances, unless something huge happens, for instance some big European bank goes under and that freezes money flows again,” said Masaru Hamasaki, a senior strategist at Toyota Asset Management.

“Many in the market had already expected economic stimulus measures taken around the world would peak out around midyear. Once the market calms down and reality starts to be reflected in stock prices, the Nikkei could return to the 10,000 level.”

Trade was thin, with some 1.4 billion shares changing hands on the Tokyo exchange’s first section, not far from the four-month low marked last Monday. Advancing stocks outnumbered declining ones by nearly 3 to 1.

CONSUMER LENDERS

Shares of Acom shot up 26.2 percent to 1,444 yen. Promise Co (8574.T) gained 17.1 percent to 685 yen and Takefuji Corp (8564.T) jumped 17.8 percent to 298 yen, bouncing back from a record low hit last week.

Consumer lenders, which offer unsecured loans to individuals and small business owners, have been struggling for survival amid a shrinking market and stricter lending regulations.

Shares of exporters gained broadly after many fell to multimonth lows last week, with the dollar climbing further above a seven-month trough against the yen, on demand from Japanese importers.

Sanyo Electric (6764.T) climbed 3.5 percent to 118 yen after sources said on Friday the company is close to finalising the sale of its chip unit to ON Semiconductor (ONNN.O), its latest move to shed noncore businesses to focus more on promising areas. [ID:nTOE66105C]

But shares of Fast Retailing (9983.T) slumped 1.8 percent to 13,190 yen after the company said on Friday that same-store sales at its Uniqlo casual-clothing chain fell 5.8 percent in June from a year earlier, the first year-on-year decline in two months.

Nomura Securities downgraded its rating on the firm to “neutral” from “buy”, citing falling domestic sales growth and its possible impact on earnings over the short-term. (Editing by Chris Gallagher)

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Nikkei down 1.3 pct as yen gains, charts darken

July 1, 2010 By Leave a Comment

TOKYO, June 29 (Reuters) – Japan’s Nikkei average slipped 1.3 percent on Tuesday, erasing earlier gains as exporters fell on a stronger yen, with the benchmark poised for its worst quarter since Lehman Brothers failed in 2008.

Charts turned ugly as well, with the Nikkei’s MACD poised for a bearish cross and its slow stochastic, which gives near-term signals on market trends, edging down in oversold territory.

Trade was thin after volume hit a four-month low on Monday, and market players said it was likely to stay that way as the market awaits a series of economic indicators this week including the Bank of Japan’s quarterly “tankan” survey of corporate sentiment on Thursday and U.S. jobs data on Friday.

Though the Nikkei edged up in morning trade, it reversed course from the start of the afternoon as the yen advanced across the board, with Japanese exporters repatriating profits before the second quarter ends later this week. [FRX/]

“It doesn’t seem to be a true risk aversion scenario since the euro isn’t falling as dramatically, what we’re seeing is a general rise in the yen,” said Nagayuki Yamagishi, a strategist with Mitsubishi UFJ Securities.

The dollar fell 0.7 percent to 88.79 yen JPY=, its lowest in six weeks, while the euro lost 0.9 percent to 108.72. EURJPY=R.

The Nikkei .N225 shed 123.27 points to 9,570.67, with the broader Topix slipping 1.0 percent to 852.19.

“The current dollar level is pretty tough for the market, and when the day’s falls in Shanghai stocks are added in the impact is significant,” said Noritsugu Hirakawa, a strategist at Okasan Securities.

“This whole situation is fanning fears about Japanese results.”

Shanghai shares .SSEC were down 3.9 percent as investors pulled funds from the market to prepare for a major IPO by Agricultural bank of China [ABC.UL]. [ID:nTOE65S03O]

The benchmark Nikkei is poised to book its worst quarter since October-December 2008 as European debt worries push investors to curb their willingness to bet on risky assets, including equities.

For the quarter ending on Wednesday it has shed about 12 percent so far, compared with a 21 percent drop in the quarter that finished in December 2008, following the collapse of Lehman Brothers.

Tuesday’s slide was worsened by the presence of a gap between 9,645 and 9,542 that opened at the start of a brief rebound that began on June 11, Yamagishi said, adding that he thought support would hold at 9,542 for now.

The next support level is 9,400, around the level of a six-month low struck on June 10. ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Graphic on markets: link.reuters.com/med74m ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

EXPORTERS HIT

Shares of exporters fell, hurt by a stronger yen as it eats into exporters’ profits when they are repatriated.

Canon Inc (7751.T) slid 2.7 percent to 3,395 yen and Tokyo Electron Ltd (8035.T) shed 1.6 percent to 5,010 yen. Honda Motor Co (7267.T) declined 1.3 percent to 2,647 yen.

Trading houses slid as metals prices fell, with London copper sliding more than 1.5 percent as concerns about economic recovery continued to weigh on the market. [ID:nTOE65S00V]

Mitsui & Co (8031.T) shed 3.2 percent to 1,075 yen, Itochu Corp (8001.T) lost 1.9 percent to 721 yen, and Marubeni Corp (8002.T) fell 1.7 percent to 466 yen.

Trade was thin with 1.7 billion shares changing hands on the Tokyo exchange’s first section, while declining shares outpaced advancing ones by nearly 3 to 1. (Additional reporting by Aiko Hayashi; Editing by Michael Watson)

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Nikkei turns negative as yen advances

June 30, 2010 By Leave a Comment

(Reuters) – Japan’s Nikkei average slipped 0.6 percent on Tuesday, erasing earlier gains as exporters fell on a stronger yen and charts remained grim, with the benchmark poised for its worst quarter since Lehman Brothers failed in 2008.

The Nikkei’s MACD continued to face downward after a sustained rise, while its slow stochastic, which gives near-term signals on market trends, also appeared set to dip after flattening in oversold territory.

Market players also said trade will likely remain thin, after volume hit a four-month low on Monday, as the market awaits a series of economic indicators this week including the Bank of Japan’s quarterly “tankan” survey of corporate sentiment on Thursday and U.S. jobs data on Friday.

The dollar fell 0.5 percent to 88.92 yen and the euro lost 0.5 percent to 109.10 as Japanese exporters repatriated profits before the second quarter ends later this week.

“The current dollar level is pretty tough for the market, and when the day’s falls in Shanghai stocks are added in the impact is significant,” said Noritsugu Hirakawa, a strategist at Okasan Securities.

“This whole situation is fanning fears about Japanese results.”

Shanghai shares fell 1.8 percent, and the benchmark Nikkei is poised to book its worst quarter since October-December 2008 as European debt worries pushed investors to curb their willingness to bet on risky assets, including equities.

The Nikkei shed 49.59 points to 9,644.97, with the broader Topix slipping 0.4 percent to 857.42.

For the quarter ending Wednesday, the index has shed about 12 percent so far, compared with a 21 percent drop in the quarter that finished in December 2008, following the collapse of Lehman Brothers.

Canon Inc lost 1.3 percent to 3,440 yen and Honda Motor Co fell 0.8 percent to 2,663 yen. Tokyo Electron shed 0.6 percent to 5,050 yen.

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Nikkei turns negative as yen advances

June 30, 2010 By Leave a Comment

TOKYO, June 29 (Reuters) – Japan’s Nikkei average slipped 0.6 percent on Tuesday, erasing earlier gains as exporters fell on a stronger yen and charts remained grim, with the benchmark poised for its worst quarter since Lehman Brothers failed in 2008.

The Nikkei’s MACD continued to face downward after a sustained rise, while its slow stochastic, which gives near-term signals on market trends, also appeared set to dip after flattening in oversold territory.

Market players also said trade will likely remain thin, after volume hit a four-month low on Monday, as the market awaits a series of economic indicators this week including the Bank of Japan’s quarterly “tankan” survey of corporate sentiment on Thursday and U.S. jobs data on Friday.

The dollar fell 0.5 percent to 88.92 yen JPY= and the euro lost 0.5 percent to 109.10 EURJPY=R as Japanese exporters repatriated profits before the second quarter ends later this week.

“The current dollar level is pretty tough for the market, and when the day’s falls in Shanghai stocks are added in the impact is significant,” said Noritsugu Hirakawa, a strategist at Okasan Securities.

“This whole situation is fanning fears about Japanese results.”

Shanghai shares .SSEC fell 1.8 percent, and the benchmark Nikkei is poised to book its worst quarter since October-December 2008 as European debt worries pushed investors to curb their willingness to bet on risky assets, including equities.

The Nikkei .N225 shed 49.59 points to 9,644.97, with the broader Topix slipping 0.4 percent to 857.42.

For the quarter ending Wednesday, the index has shed about 12 percent so far, compared with a 21 percent drop in the quarter that finished in December 2008, following the collapse of Lehman Brothers.

Canon Inc (7751.T) lost 1.3 percent to 3,440 yen and Honda Motor Co (7267.T) fell 0.8 percent to 2,663 yen. Tokyo Electron (8035.T) shed 0.6 percent to 5,050 yen.

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Nikkei turns negative as yen advances

June 30, 2010 By Leave a Comment

(Reuters) – Japan’s Nikkei average slipped 0.6 percent on Tuesday, erasing earlier gains as exporters fell on a stronger yen and charts remained grim, with the benchmark poised for its worst quarter since Lehman Brothers failed in 2008.

The Nikkei’s MACD continued to face downward after a sustained rise, while its slow stochastic, which gives near-term signals on market trends, also appeared set to dip after flattening in oversold territory.

Market players also said trade will likely remain thin, after volume hit a four-month low on Monday, as the market awaits a series of economic indicators this week including the Bank of Japan’s quarterly “tankan” survey of corporate sentiment on Thursday and U.S. jobs data on Friday.

The dollar fell 0.5 percent to 88.92 yen and the euro lost 0.5 percent to 109.10 as Japanese exporters repatriated profits before the second quarter ends later this week.

“The current dollar level is pretty tough for the market, and when the day’s falls in Shanghai stocks are added in the impact is significant,” said Noritsugu Hirakawa, a strategist at Okasan Securities.

“This whole situation is fanning fears about Japanese results.”

Shanghai shares fell 1.8 percent, and the benchmark Nikkei is poised to book its worst quarter since October-December 2008 as European debt worries pushed investors to curb their willingness to bet on risky assets, including equities.

The Nikkei shed 49.59 points to 9,644.97, with the broader Topix slipping 0.4 percent to 857.42.

For the quarter ending Wednesday, the index has shed about 12 percent so far, compared with a 21 percent drop in the quarter that finished in December 2008, following the collapse of Lehman Brothers.

Canon Inc lost 1.3 percent to 3,440 yen and Honda Motor Co fell 0.8 percent to 2,663 yen. Tokyo Electron shed 0.6 percent to 5,050 yen.

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Nikkei falls below support to two-week closing low

June 26, 2010 By Leave a Comment

TOKYO, June 25 (Reuters) – Japan’s Nikkei average extended falls on Friday for its biggest weekly loss in a month, closing below a key support level in what market players said could signal still more drops to come.

Fresh signs of weakness in U.S. consumer spending that have raised concerns about the outlook for corporate earnings sparked much of the selling.

The Nikkei shed 1.9 percent on Friday and 2.6 percent for the week to close below its 25-day moving average, a proxy for a one-month moving average that is keenly watched in Japan.

Support lies near a six-month low hit this month around 9,400. But on weekly charts, the Nikkei’s 13-week moving average has crossed below the 26-week moving average — a formation known as a “death cross.”

“The feeling in the market really isn’t very good right now, and if we don’t get something encouraging out of the G20 summit we could see more falls next week,” said Noritsugu Hirakawa, a strategist at Okasan Securities.

“With the G20 summit going on it’s very hard to buy, and the yen’s gains are adding some downward pressure.”

Leaders of the Group of Eight and Group of 20 rich and developing nations meet in Canada June 25 to 27 to discuss how to plot the world’s emergence from the worst financial crisis since the Great Depression. [ID:nN18322198]

Shares of Mizuho Financial Group (8411.T) hit a seven-month low after sources told Reuters the bank will decide on Friday to sell up to 6 billion new shares in a planned global offering, increasing the total number of shares outstanding by up to 38 percent. [ID:nTOE65O032]

The benchmark Nikkei .N225 shed 190.86 points to 9,737.48, its lowest close in two weeks. The broader Topix slipped 1.4 percent to 867.30.

“Investors had been aware that the speed of a recovery in the economy is rather slow but believed earnings are on a solid footing, but concerns are now emerging about the outlook for corporate earnings,” said Kenichi Hirano, operating officer at Tachibana Securities.

The technical picture has darkened for the Nikkei, with its MACD turning downwards after a sustained rise. Its slow stochastic, which gives near-term signals on market trends, shows the drop may yet have further to go as well.

The S&P 500 fell on Thursday for a fourth straight day, losing nearly 4 percent over the four sessions, with retailers among the biggest decliners a day after discouraging outlooks from Bed Bath & Beyond (BBBY.O) and athletic apparel maker Nike Inc (NKE.N) [ID:nN23235380]

FOREIGN SELLING

On Friday, orders for Japanese stocks placed through 10 foreign securities houses before the start of trade showed net selling for a fourth straight day, although market players said foreign investor activity appeared to have ebbed later.

“I think a lot of foreign investors have closed their positions as the quarter-end nears,” said Okasan’s Hirakawa.

Shares of blue-chip exporters fell to drag down the broader market, with several major names hit by brokerage downgrades.

Shares of Canon (7751.T) lost 4.5 percent to 3,530 yen after Credit Suisse cut its rating on the stock to “underperform” from “neutral.”

The brokerage also cut its rating on Tokyo Electron (8035.T) to “neutral” from “outperform” and lowered the target price, saying the order recovery cycle for 2010-11 semiconductor capex is likely approaching a peak. Tokyo Electron lost 5.6 percent.

Large Japanese banks gained in early trade after a Financial Times report that the Basel Committee is set to relax its proposals on how much capital banks must set aside to protect against future financial crises, but by afternoon had reversed course. [ID:nLDE65N2C1]

Mitsubishi UFJ Financial Group (8306.T) lost 0.5 percent to 419 yen and Sumitomo Mitsui Financial Group (8316.T) shed 0.7 percent to 2,658 yen. Mizuho lost 1.3 percent to 153 yen.

Mizuho had registered with regulators last month to raise up to 800 billion yen in a global offering of new shares to prepare for stricter capital requirements, but had not made an official decision to go ahead with the offering. [ID:nTOE64D069]

Trade picked up on the Tokyo exchange’s first section, with 1.9 billion shares changing hands, the highest volume in two weeks. Declining shares outnumbered advancing ones by nearly 4 to 1.

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Yuan hits post-revaluation high ahead of G20 summit

June 26, 2010 By Leave a Comment

SHANGHAI, June 25 (Reuters) – The yuan CNY=CFXS climbed on Friday to its highest since its July 2005 revaluation after the central bank set the daily reference rate at a post-revaluation high in an apparent goodwill gesture ahead of the G20 summit.

But trade was sluggish with market players cautious over how much the yuan could appreciate in the near term, despite a gain so far of 0.5 percent in the first week after China’s weekend announcement of a depegging from the dollar, marking the biggest weekly gain since December 2008.

Weekly volatility in the spot yuan rate versus the dollar hit its highest since mid-2008, when China repegged the yuan to the dollar to help ease the impact of the global financial crisis on its economy.

Spot yuan’s range for the week ran to 416 pips and averaged more than 200 pips per day, compared with moves of only a few pips per day during the two-year dollar peg. [ID:nTOE65M062]

Many dealers expect two-way volatility to remain the norm after China’s weekend currency policy reform, although the yuan’s rise will not likely be enough to satisfy U.S. lawmakers and other critics who want the yuan to rise as much as 40 percent. China is not expected to accept such a demand.

“Beijing told us that any appreciation would be gradual, and that is what is happening, with the reference rate for the yuan against the dollar today set little more than half a percent stronger than where it was last Friday,” said Brian Jackson, strategist with Royal Bank of Canada in Hong Kong.

“But the rest of the G20 was not born yesterday, and there may be some suspicion that the move over the last week was just window-dressing to take the exchange rate issue off the top of the agenda at this weekend’s summit,” he said.

“To reduce the risk of trade tensions, we will need to see further yuan gains in the days and weeks ahead.”

A Reuters poll of 33 economists projected that China would be true to its word and prevent a sharp rise in the newly unshackled yuan, with a median forecast of a 2.4 percent rise over the next year from the level before depegging. [ID:nSGE65L01H]

The yuan gave up some early gains to trade at 6.7926 to the dollar at midday, still up from Thursday’s close of 6.7997 but lower than Friday’s central bank mid-point of 6.7896, which was up sharply from Thursday’s mid-point of 6.8100. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Full coverage [ID:nCHINATAKE] PDF on yuan: r.reuters.com/fuk43m Yuan microsite: china.thomsonreuters.com/yuan/ Yuan graphics: r.reuters.com/byq23m Insider TV

-- Yuan to rise before G20 link.reuters.com/jes92m

-- Yuan shows confidence link.reuters.com/hyc33m

-- Some see delay tactic link.reuters.com/xad33m ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>

MIXED SIGNALS

U.S. administration officials and some lawmakers appear to have differing views over the initial rise in the yuan.

U.S. President Barack Obama said in Washington on Thursday that China had made progress by announcing greater currency flexibility, but it was too early to tell if the yuan’s rise would be enough to help rebalance world growth.

“We did not expect a complete 20 percent appreciation overnight, for example, simply because that would be extremely disruptive to world currency markets and to the Chinese economy,” Obama said. [ID:nN24164984]

A U.S. lawmaker said on Thursday, however, that the United States should keep open a bill that would pressure China to raise the value of its currency.

“I think we need to keep that legislation on the burner. I think whether we act on it will be affected by what China does,” House of Representatives Ways and Means Committee Chairman Sander Levin told reporters. [ID:nN24134208]

China announced over the weekend that it would allow the yuan’s exchange rate to move more freely but it has made it clear that its currency reform would be gradual and controllable.

It is widely believed in the domestic market that China will not make any further concessions and that fresh pressure from U.S. lawmakers would very likely backfire due to more volatile market and economic conditions since the global financial crisis.

The euro zone’s debt woes have cast doubt on the pace of China’s economic recovery, reminding Beijing how vulnerable the world’s third-largest economy is to a global slowdown.

Chinese economists often argue that Western critics underestimate that vulnerability, especially given how far China’s per capita income lags developed countries.

They say it may be inappropriate to apply Western standards to the currency of a country whose per capita GDP is only one-20th that of the United States.

Caution about Beijing’s stance was reflected in the offshore forwards markets. Benchmark dollar/yuan one-year non-deliverable forwards (NDFs) rose to 6.6750 bid by midday from Thursday’s close of 6.6670, with implied yuan appreciation over that period falling to 1.72 percent from 2.14 percent the previous day. (Editing by Edmund Klamann)

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Nikkei slips off 1-month highs on profit-taking

June 23, 2010 By Leave a Comment

(Reuters) – Japan’s Nikkei average slipped 1.2 percent on Tuesday as profit-taking emerged after a bounce to a one-month high the day before and foreign investors turned sellers.

Japan

Analysts said the market took a breather after recent rises, including last week’s gain of 3 percent, the best weekly performance in three months, as well as Monday’s surge, but that its essential upward trend looked unchanged.

The benchmark fell below a chart retracement level with euphoria over the yuan’s rise ebbing, but many saw support intact at around 9,800, the Nikkei’s 25-day moving average.

“Sentiment overall appears to have turned rather positive, now that it appears the euro may have bottomed out, and this can lead the market suddenly and sharply higher, the way we saw yesterday on the yuan news,” said Hideyuki Ishiguro, a strategist at Okasan Securities.

In light trade, the benchmark Nikkei .N225 fell 125.12 points to 10,112.89, below a 38.2 percent retracement at 10,155 of the fall from its April high of 11,408.17 to its June low of 9,378.23.

The broader Topix shed 0.9 percent to 894.56.

Some analysts said that the Nikkei needed to consolidate above 10,200, which falls a bit below the level of its 50-week moving average, to resume rising again.

“Breaking above this is extremely important, but we need a bit more market energy and volume to do so,” said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.

“But today we’re seeing a lot of foreign selling. There’s no follow-through from yesterday.”

European investors were short-covering Nikkei futures on Monday, lifting the cash market as well, analysts said.

The yuan spot exchange rate on Monday rose to its highest since July 2005, sending Asian stocks to a five-week high on hopes for greater Chinese buying power.

But the euphoria faded later in the day, with Wall Street dipping, leaving the Nikkei — which market players said had risen mainly on short-covering in thin volume — vulnerable.

On Tuesday, China’s central bank set the yuan’s daily mid-point at the highest level since its revaluation in July 2005. But the Nikkei shrugged it off.

The Nikkei’s relative strength index (RSI) slipped to 54 after rising close to 60 on Monday, but its MACD continued to climb and few in the market thought any serious falls were in the offing.

“The market was boosted mostly by short-squeezing yesterday, with only some investors who grew optimistic about China’s economic outlook taking long positions,” said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities.

“More gains now look fairly limited, also due to worries about the euro zone after news about BNP Paribas and Spanish banks.”

Ratings agency Fitch on Monday cut French bank BNP Paribas’ long-term international rating to AA- from AA, citing reliance on capital markets for a large part of its profits and a deterioration of asset quality in 2009.

Standard and Poor’s Rating Services also said on Monday it had raised its estimates for loan losses for Spain’s banking sector between 2009 and 2011 due to the faster depreciation of real estate assets on banks’ books.

EXPORTERS WEIGH

Shares of exporters ran out of steam and slid after helping lift the Nikkei on Monday.

Canon Inc (7751.T) fell 2.7 percent to 3,780 yen and Tokyo Electron Ltd (8035.T) dropped 3.6 percent to 5,620 yen. TDK Corp (6762.T) lost 2.3 percent to 5,430 yen.

Denso Corp (6902.T), a car parts maker affiliated with Toyota Motor Corp (7203.T), declined 1.8 percent to 2,622 yen after saying its joint venture plant in Guangzhou, China has halted production since Monday morning due to a labor strike.

The plant, Denso (Guangzhou Nansha) Co Ltd, has also halted supply of its fuel injection equipment and other products to Toyota, Honda Motor Co (7267.T) and other carmaker clients since Monday, Denso spokeswoman Yoko Suga said.

Tokyo Electric Power Co (9501.T), Asia’s biggest electric power company, edged up 0.1 percent to 2,431 yen after the Nikkei business daily reported that it is considering investing “tens of billions of yen” in a coal-fired power plant planned by Vietnam Oil and Gas Corp (Petro Vietnam). The plant is expected to start operations in the mid-2010s.

Trade was thin on the Tokyo exchange’s first section, with 1.7 billion shares changing hands, though that was up from last week’s four-month low just below 1.5 billion.

Declining shares outnumbered advancing ones, 987 to 529. (Editing by Joseph Radford)

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Nikkei slips off 1-mth highs on profit-taking

June 23, 2010 By Leave a Comment

TOKYO, June 22 (Reuters) – Japan’s Nikkei average slipped 1.2 percent on Tuesday as profit-taking emerged after a bounce to a one-month high the day before and foreign investors turned sellers.

Analysts said the market took a breather after recent rises, including last week’s gain of 3 percent, the best weekly performance in three months, as well as Monday’s surge, but that its essential upward trend looked unchanged.

The benchmark fell below a chart retracement level with euphoria over the yuan’s rise ebbing, but many saw support intact at around 9,800, the Nikkei’s 25-day moving average.

“Sentiment overall appears to have turned rather positive, now that it appears the euro may have bottomed out, and this can lead the market suddenly and sharply higher, the way we saw yesterday on the yuan news,” said Hideyuki Ishiguro, a strategist at Okasan Securities.

In light trade, the benchmark Nikkei .N225 fell 125.12 points to 10,112.89, below a 38.2 percent retracement at 10,155 of the fall from its April high of 11,408.17 to its June low of 9,378.23.

The broader Topix shed 0.9 percent to 894.56.

Some analysts said that the Nikkei needed to consolidate above 10,200, which falls a bit below the level of its 50-week moving average, to resume rising again.

“Breaking above this is extremely important, but we need a bit more market energy and volume to do so,” said Koichi Ogawa, chief portfolio manager at Daiwa SB Investments.

“But today we’re seeing a lot of foreign selling. There’s no follow-through from yesterday.”

European investors were short-covering Nikkei futures on Monday, lifting the cash market as well, analysts said.

The yuan spot exchange rate on Monday rose to its highest since July 2005, sending Asian stocks to a five-week high on hopes for greater Chinese buying power.

But the euphoria faded later in the day, with Wall Street dipping, leaving the Nikkei — which market players said had risen mainly on short-covering in thin volume — vulnerable.

On Tuesday, China’s central bank set the yuan’s daily mid-point CNY=SAEC at the highest level since its revaluation in July 2005 [ID:nECB000553]. But the Nikkei shrugged it off.

The Nikkei’s relative strength index (RSI) slipped to 54 after rising close to 60 on Monday, but its MACD continued to climb and few in the market thought any serious falls were in the offing.

“The market was boosted mostly by short-squeezing yesterday, with only some investors who grew optimistic about China’s economic outlook taking long positions,” said Hiroaki Kuramochi, chief equity marketing officer at Tokai Tokyo Securities.

“More gains now look fairly limited, also due to worries about the the euro zone after news about BNP Paribas and Spanish banks.”

Ratings agency Fitch on Monday cut French bank BNP Paribas’ long-term international rating to AA- from AA, citing reliance on capital markets for a large part of its profits and a deterioration of asset quality in 2009. [ID:nN21250262]

Standard and Poor’s Rating Services also said on Monday it had raised its estimates for loan losses for Spain’s banking sector between 2009 and 2011 due to the faster depreciation of real estate assets on banks’ books. [ID:nLDE65K1TE]

EXPORTERS WEIGH

Shares of exporters ran out of steam and slid after helping lift the Nikkei on Monday.

Canon Inc (7751.T) fell 2.7 percent to 3,780 yen and Tokyo Electron Ltd (8035.T) dropped 3.6 percent to 5,620 yen. TDK Corp (6762.T) lost 2.3 percent to 5,430 yen.

Denso Corp (6902.T), a car parts maker affiliated with Toyota Motor Corp (7203.T), declined 1.8 percent to 2,622 yen after saying its joint venture plant in Guangzhou, China has halted production since Monday morning due to a labour strike.

The plant, Denso (Guangzhou Nansha) Co Ltd, has also halted supply of its fuel injection equipment and other products to Toyota, Honda Motor Co (7267.T) and other carmaker clients since Monday, Denso spokeswoman Yoko Suga said. [ID:nTFA006678]

Tokyo Electric Power Co (9501.T), Asia’s biggest electric power company, edged up 0.1 percent to 2,431 yen after the Nikkei business daily reported that it is considering investing “tens of billions of yen” in a coal-fired power plant planned by Vietnam Oil and Gas Corp (Petro Vietnam). The plant is expected to start operations in the mid-2010s. [ID:nSGE65K0JA]

Trade was thin on the Tokyo exchange’s first section, with 1.7 billion shares changing hands, though that was up from last week’s four-month low just below 1.5 billion.

Declining shares outnumbered advancing ones, 987 to 529. (Editing by Joseph Radford)

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FACTBOX-Forecasts for yuan after China drops dollar peg

June 21, 2010 By Leave a Comment

June 20 (Reuters) – Following are forecasts by bankers and strategists on the level of expected yuan appreciation after China ditched its peg to the U.S. dollar. [ID:nSGE65J00E]

Currencies

Yuan offshore forwards: [CNY/] CNYNDFOR=

Spot yuan: CNY=CFXS CNY=

FORECASTS:

ANDY ROTHMAN, MACRO STRATEGIST AT CLSA IN SHANGHAI (JUNE 19): “The PBOC statement makes clear that the currency will move only very gradually. I expect only about 0.2 percent a month until the situation in Europe stabilises. Then look for the appreciation to return to the 5-7 percent pace of the 2005-2007 period.”

BRIAN JACKSON, STRATEGIST AT ROYAL BANK OF CANADA IN HONG KONG (JUNE 19):

“We have for several months been forecasting a shift in China’s exchange rate policy and for USD/CNY to start falling by the middle of this year — our long-standing forecast has been for USD/CNY to fall to 6.70 by end-Q2 (a move of 1.9 percent from current levels) and to 6.50 by end-2010 (a move of 5.0 percent). Concerns about the weak EUR and euro area have clearly played a major role in delaying a move lower in USD/CNY, but we have remained confident that such a move would occur based on our view that it would be in China’s own best interests — a stronger CNY would not only help prevent trade tensions from developing later this year but, more importantly, would help to keep China’s recovery on a sustainable path and to rebalance its economy. The PBOC’s announcement strongly suggests to us that Beijing is ready to move in this direction.”

C.FRED BERGSTEN, PRESIDENT OF THE PETERSON INSTITUTE FOR INTERNATIONAL ECONOMICS IN WASHINGTON (JUNE 19):

“If the Chinese are smart, they’ll let the rate jump up the first few days of next week — 5, 6, 8 percent — so as to blunt any ongoing inflow of capital and try to limit the one-way-bet idea and the speculative inflow.”

BEN SIMPFENDORFER, ECONOMIST AT ROYAL BANK OF SCOTLAND IN HONG KONG (JUNE 19):

“A more flexible CNY will be welcomed by some of China’s critics. But it is clearly unlikely to appease those calling for a large revaluation. Tensions will accordingly persist, especially heading into the U.S. November elections, and should Europe’s economic woes worsen. There is accordingly no change to my call for around 3 percent annualised appreciation against the USD over the next year. The call assumes a steady pace of appreciation and targets 6.750 by end-10. The chances of a one-off revaluation remain small in spite of today’s move.”

GLENN MAGUIRE, NON-JAPAN ASIA ECONOMIST AT SOCIETE GENERALE IN HONG KONG (JUNE 19):

“We believe the likely reality is that the yuan will appreciate by more than the statement implies over the remainder of this year and into 2011. Again, for China to maintain a degree of equilibrium in its balance of payments, the currency will need to appreciate sufficiently to mute the commodity price effects resulting from its ongoing successful domestic policies. As a rough estimate, the pace of appreciation is therefore likely to match the import prices in the medium term.”

JUN MA, CHIEF CHINA ECONOMIST AT DEUTSCHE BANK IN HONG KONG (JUNE 19):

“There will be no one-off revaluation of the RMB vs the USD. This is largely due to the fact that the RMB has already appreciated 15 percent against the EUR over the past two months and the Chinese leadership has been increasingly concerned about the potential negative impact of the European sovereign crisis on Chinese exports.

“The official trading band for the RMB/USD rate will resume the previous +/- 0.5 percent around the daily fixing rate (the middle rate) announced by the SAFE (State Administration of Foreign Exchange). The actual volatility in the future, however, will be greater than that between 2005 and 2008, in our view. The greater flexibility (or two-way volatility between the RMB and the USD) will help mitigate hot money inflows. As for the pace of future RMB appreciation vs the USD, we think it will be modest relative to market expectations a few months ago but somewhat faster than what’s implied by the NDF market last Friday.”

PRASENJIT BASU, CHIEF ECONOMIST ASIA EX-JAPAN WITH DAIWA CAPITAL MARKETS IN SINGAPORE, JUNE 19

“Ideally, China’s authorities would prefer to have two-way movement in the renminbi, but that is difficult to achieve given the large current account surplus and the high net capital inflows. Initially, we are likely to see very gradual appreciation in the currency, as the daily mid-point on the yuan is edged up. But restraining speculative pressure is going to remain very challenging, both for the PBOC and other Asian central banks, and we expect the RMB to be at 6.45/US$ by end-2010.” (Compiled by Alan Wheatley, Paul Eckert and Umesh Desai, Editing by Dean Yates)

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FOREX-Euro slips after chart failure, caution over Spain

June 18, 2010 By Leave a Comment

TOKYO, June 17 (Reuters) – The euro slipped from its two-week highs versus the dollar on Thursday as its short-covering rally ran out of steam and as worries about Spain’s public finances and banking system stopped it overcoming key resistance.

After failing to break above $1.2350-55 twice in the past 48 hours, the euro EUR= is at risk of retreat to around $1.2175, a 38.2 percent retracement of its rebound from a four-year low below $1.19 set last week.

Traders said the rally now looked tired and the euro was likely to see selling into rallies as tolerance for risk subsided on a revival in concerns about euro zone fiscal problems.

“Some people want to reduce risk positions on worries about Spain,” said Daisuke Karakama, market economist at Mizuho Corporate Bank.

But the euro’s fall has not been as sharp as in May when worries about the impact of Europe’s fiscal problems drove it down rapidly, and this indicated that although some shorts have been covered, the market is still short euro longer term, Karakama said.

“The euro would have been sold much more hysterically if it were a month ago,” he said.

It slipped 0.3 percent from late U.S. levels to $1.2270. It is more than half a percent below the two-week high of $1.2354 hit on Wednesday but still up about 3 percent from the four-year low of $1.1876.

The market will be watching a Spanish bond auction later in the day after the spread of Spanish government bond yields over benchmark Bunds soared to a euro lifetime high on Wednesday. [ID:nLDE65F23Y]

“In the past few sessions, rises in the credit spreads of euro zone countries have not led to euro selling as much as before. But unless conditions in Europe improve, correlation (between the euro and European bond spreads) will return,” said Junya Tanase, senior strategist at JPMorgan Chase Bank.

The European Union holds a summit on Thursday to discuss ways to strengthen budget discipline and economic policy coordination.

The EU and IMF on Wednesday denied a report they and the U.S. Treasury were drawing up a safety net for Spain. But worries about Spanish banks put pressure on yields and the market will be looking for the result of bank stress tests which the Spanish central bank said would be published soon. [ID:nLDE65F1X2] [ID:nLDE65F1AL]

The euro also fell against sterling, the yen and the Swiss franc. It shed 0.7 percent to 112.00 yen EURJPY=R as Japanese banks sold. That helped push the dollar down 0.5 percent to 91.30 yen JPY=.

The dollar index .DXY =USD was up 0.3 percent at 86.32, well above support near 85.85 which is the index’s May 28 low.

The Australian dollar AUD=D4 eased from one-month highs of $0.8674. It was trading at $0.8596, down 0.3 percent, with some players looking to sell into rallies after it failed to hold gains above $0.8650.

The dollar was marginally higher against the Swiss franc CHF= at 1.1303 francs ahead of a Swiss National Bank meeting.

The SNB is expected to keep interest rates low but may announce measures to drain excess money from the economy after flooding the market with francs since 2009 to keep the currency from appreciating too rapidly. [ID:nLDE65E2DB] (Additional reporting by Reuters FX analyst Krishna Kumar in Sydney; Editing by Joseph Radford)

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Nikkei up 1.8 pct to hit one-month closing high

June 17, 2010 By Leave a Comment

TOKYO, June 16 (Reuters) – Japan’s Nikkei average rose 1.8 percent on Wednesday to a one-month closing high as short-covering picked up and investors grew more confident about the global economy after successful debt sales by some of the weakest euro zone members.

The market gained across the board, with blue-chip exporters such as Canon Inc (7751.T) in favour on easing worries about a stronger yen, while Nintendo (7974.OS) jumped 5.2 percent after taking the wraps off its new 3D DS portable game player. [ID:nN1547425]

The benchmark Nikkei picked up steam after ending the previous day above its 25-day moving average of just below 9,900 for the first time in nearly two months, as risk appetite, long under siege due to worries about Europe’s debt crisis, improved.

“At this point, sentiment’s improved on a short-term basis, particularly after the S&P 500 broke above its 200-day moving average to show that the market there has bottomed out,” said Hideyuki Ishiguro, a strategist at Okasan Securities.

“Expectations for this week’s summit of euro zone leaders and the Group of 20 leaders’ summit later this month are also helping, with all of this feeding into short-covering.”

The benchmark Nikkei .N225 gained 179.26 points to 10,067.15, its highest close since mid-May. The broader Topix rose 1.5 percent to 892.38.

Some market players said that with the Nikkei sitting above 10,000, it looks to have hit a double bottom, and the next resistance levels will likely be around 10,200 and 10,300, around its 50-week moving average and its 200-day moving average.

“The speculative sell-off in response to negative news, which we had seen up until now, may have come to a halt, and short-covering is now picking up momentum,” said Masaru Hamasaki, a senior strategist at Toyota Asset Management.

While some said the Nikkei could try the 200-day moving average as early as Thursday, others said a recent buildup of long positions in blue-chip shares such as Sony Corp (6758.T) could pose a threat to further advances.

“If the market’s upward momentum falls off at all, investors could start unwinding these positions,” said Toshiyuki Kanayama, a market analyst at Monex Inc.

EURO BOOST

U.S. stocks climbed more than 2 percent, with the S&P 500 turning positive for the year as solid demand for Irish and Spanish government debt calmed investors’ nerves a day after Moody’s downgraded Greece’s credit rating to junk status.

The euro hit a two-week high above $1.23 EUR=. [ID:nLDE65E126]

The euro steadied near two-week highs, while euro/yen EURJPY= was flat at 112.74, having jumped nearly 0.9 percent in the previous session. [FRX/]

Chip equipment maker Tokyo Electron (8035.T) and other chip-linked shares climbed after two Taiwanese chipmakers forecast growing demand in the coming months, helping to boost the Philadelphia semiconductor index .SOXX 5.5 percent [ID:nTOE65E03Y].

Tokyo Electron rose 2.3 percent to 5,770 yen, chip tester maker Advantest (6857.T) rose 2.5 percent to 2,028 yen and stepper maker Nikon Corp (7731.T) rose 5.6 percent to 1,728 yen.

Itochu Corp (8001.T) and other trading houses rose along with rising metals prices as signs of an improving economy and easing European debt problems boosted investor demand for industrial metals. [ID:nLDE65E11P]

Shares of Promise Co (8574.T) rose 3.6 percent to 658 yen, extending earlier gains after the company president told Reuters in an interview that Sumitomo Mitsui Financial Group Inc (8316.T) has pledged to help the Japanese consumer lender with its financing.

Ken Kubo said that he is confident his firm will be able to repay 460 billion yen ($5 billion) in short-term debt in the financial year to March 2011. [ID:nTKG006771]

Volume picked up slightly, with 1.7 billion shares changing hands on the Tokyo exchange’s first section, after posting a four-month low on Monday at just below 1.5 billion. Advancing stocks outnumbered declining one by more than 6 to 1.

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Investors again step up at 10-year US note auction

June 10, 2010 By Leave a Comment

June 9 (Reuters) – Investors again loaded up their plates on Wednesday with reopened 10-year Treasury notes in the second of this week’s debt auctions, with analysts generally deeming demand in the sale to be near average.

Bonds

The sale of $21 billion of the notes follows near average demand in an auction of $36 billion of three-year Treasury notes US3YT=RR on Tuesday.

Lower Treasury debt prices and higher yields on Wednesday helped to boost the appetite for the reopened 10-year notes US10YT=RR, analysts said.

“Another very decent auction that came very close to the solid, average auction statistics observed in the more recent ten year reopenings,” said William O’Donnell, head of U.S. Treasury strategy at RBS Securities in Stamford, Connecticut.

“Nothing stands out except that the concession this morning helped to bring the auction pretty much on the screws and on-averages,” he said.

The high yield in the auction came in at 3.242 percent, not far off the rate at which the similar securities are trading in the open market.

Wednesday’s sale is the second in a week of three auctions worth $70 billion in total. The Treasury will auction $13 billion in 30-year reopened bonds on Thursday.

“Basically on the screws as the yield comes where market was trading at the time. Also just like yesterday participation levels look in-line with recent averages if you look how much dealers had to take down, how much the rest of the street bid on,” said Suvrat Prakash, US interest rate strategist with BNP Paribas in New York. (Reporting by Chris Reese and Burton Frierson: Editing by Chizu Nomiyama)

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MOVES-RBS Coutts hires Citi strategist for investment role

June 9, 2010 By Leave a Comment

June 8 (Reuters) – RBS Coutts, the private banking arm of Royal Bank of Scotland (RBS.L), said on Tuesday it has appointed Norman Villamin to the newly created role of head of investment strategy for Asia.

Financials

Villamin, who is based in Singapore, joined RBS Coutts from Citi Private Bank where he specialised in asset allocation and multi-asset class research and advice.

Private banks, in particular Standard Chartered (STAN.L) and Deutsche (DBKGn.DE), are hiring aggressively in Asia and poaching staff from one another in a bid to tap the region’s growing ranks of millionaires.

RBS Coutts said Villamin’s appointment “is the latest in a series of senior hires RBS Coutts has made over the last few months to support the bank’s growth aspirations in Asia.”

(Reporting by Kevin Lim; Editing by Saeed Azhar)

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Dollar index rises to 15-month high

June 2, 2010 By Leave a Comment

June 1 (Reuters) – The dollar rose to a 15-month high versus a currency basket on Tuesday, fuelled by rising risk aversion stemming from geopolitical concerns, together with debt problems in the euro zone.

Currencies | Global Markets

The dollar .DXY rose around 1 percent on the day to 87.473, its highest level since March 2009.

“Geopolitical concerns in the Middle East and Korea are to the fore, supporting the dollar, as well as debt problems in the euro zone,” said Tom Levinson, fx strategist at ING.

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