Forex News | Currency News by Forexlive

It’s certainly not encouraging to see USD/JPY trading at 76.60 again, we’ve been flat-lining around this level all week. The other majors aren’t much changed from yesterday although there was at least some intraday movement. The exception was the CHF which spiked higher during the European session on the Swiss statement regarding living with a strong Franc.

Good luck today.

WASHINGTON (MNI) – The following was issued Wednesday by the
Treasury Department, the Federal Reserve and the N.Y. Federal Reserve
Bank:

Preliminary data from an annual survey of U.S. portfolio holdings
of foreign securities at year-end 2010 were released today and posted on
the Treasury Web site. Final survey results, which will include
additional detail as well as revisions to the data, will be reported on
October 31, 2011.

The survey was undertaken jointly by the U.S. Department of the
Treasury, the Federal Reserve Bank of New York, and the Board of
Governors of the Federal Reserve System.

A complementary survey measuring foreign holdings of U.S.
securities also is conducted annually. Data from the most recent such
survey, which reports on securities held on June 30, 2011, are currently
being processed. Preliminary results are expected to be reported on
February 29, 2012.

Overall Preliminary Results

The survey measured the value of U.S. holdings of foreign
securities at year-end 2010 of approximately $6.8 trillion, with $4.6
trillion held in foreign equities, $1.7 trillion in foreign long-term
debt securities (original term-to-maturity in excess of one year), and
$0.4 trillion held in foreign short-term debt securities. The previous
such survey, conducted as of year-end 2009, measured the value of U.S.
holdings of $6.0 trillion, with $4.0 trillion held in foreign equities,
$1.6 trillion in foreign long-term debt securities, and $0.4 trillion
held in foreign short-term debt securities.

Table 1. U.S. holdings of foreign securities, by type of security,
as of survey dates[1]

(Billions of dollars)

Type of Security Dec. 31, 2009 Dec. 31, 2010

Long-term Securities 5,589 6,362

Equity 3,995 4,647

Long-term debt 1,594 1,715

Short-term debt securities 387 402

Total 5,977 6,763

U.S. Portfolio Investment by Country

Table 2. U.S. holdings of foreign securities, by country of issuer
and type of security, for the countries attracting the most U.S.
portfolio investment, as of December 31, 2010

(Billions of dollars, except as noted)

Country or region Total Equity Long-Term Debt Short-Term Debt

1 United Kingdom 1,002 626 253 123

2 Canada 695 409 253 34

3 Japan 519 450 47 22

4 France 366 244 82 40

5 Cayman Islands 366 166 196 3

6 Switzerland 327 319 6 2

7 Australia 323 150 123 51

8 Germany 299 207 74 18

9 Brazil 235 194 41 1

10 Netherlands 233 120 103 9

11 Bermuda 160 134 25 *

12 Korea, South 148 122 25 1

13 Hong Kong 135 133 2 *

14 Ireland 132 101 27 3

15 Sweden 122 63 30 29

16 Mexico 109 77 32 *

17 China, Mainland 102 101 2 *

18 Luxembourg 100 33 65 3

19 Taiwan 95 94 * 0

20 India 91 86 4 1

21 Spain 87 66 21 *

22 Netherlands Antilles 83 82 1 0

23 South Africa 78 70 8 0

24 Italy 66 51 14 *

25 Singapore 64 56 7 *

26 Israel 64 45 17 2

Rest of world 762 446 257 59

Total 6,763 4,647 1,715 402

* Greater than zero, but less than $500 million

——————————————————————————–

[1] The stock of foreign securities for December 31, 2010,
reported in this survey may not, for a number of reasons, correspond to
the stock of foreign securities on December 31, 2009, plus cumulative
flows reported in Treasurys transactions reporting system. The final
report on U.S. holdings of foreign securities as of end-year 2010 will
contain an analysis of the relation between the stock and flow data.

** Market News International Washington Bureau: 202-371-2121 **

[TOPICS: MTABLE,MI$$$$,MAUDS$,M$U$$$]

LAFAYETTE, La. (MNI) – Answering questions after his speech, Atlanta
Federal Reserve Bank President Dennis Lockhart Wednesday repeated that
the burden of a high unemployment rate, a large number of long-term
unemployed and part-time workers necessarily focuses the Fed on the
problems of insufficient growth, instead of an inflation rate that is
within its desired zone.

Speaking to the Lafayette, La. Chamber of Commerce, Lockhart said
that although central bankers always have to watch inflation closely, it
is hard to be concerned at this point seeing the slack in the economy
and the degree of unused labor resources.

Now, however, inflation “has settled” into a zone consistent with
the Fed’s goal.

Large corporations have “waxed and waned” in their caution in the
past two years since the financial crisis, he said, and now are back in
an extremely cautious mode following the weeks of arguing over the debt
ceiling.

Europe’s continuing problems don’t help and the Fed is “watching
the European situation with some concern,” even though U.S. banks’
direct exposure to European peripherals is limited. He said indirect
fallout on the U.S. economy from Europe cannot be ruled out.

The Fed, he said, tries not to get into specifics on fiscal policy
but repeated, the problem at the moment is more growth than it is
inflation.

Lockhart repeated what he had said in his speech, that he is
“comfortable” with current policy, including the stretching out of low
rate policy into 2013 and said he does not rule out any other policy
option, including to ease further. He said he believes that the 2013
horizon can be moved forward or back, depending on economic
circumstances.

** Market News International **

[TOPICS: M$U$$$,MMUFE$,MGU$$$,MFU$$$]

• ADP employment report 91k private sector jobs created in August
• Chicago PMI falls less than expected: 56.5 in August from 58.8 in July
• Factory orders rise 2.4% in July; stronger than expected
• Swiss economy minister: We will have to live with strong CHF
• Canadian GDP contracts 0.1% in Q2
• Greek audit committee: Greek debt out of control
• Fed’s Lockhart (non-voter) sounds like he could be persuaded on QE3 if economy worsens
• US 10-year note yield rises 5.5 bp to 2.25%
• S&P 500 rises 0.5% to 1220
• Gold falls $2 to $1825; oil unch at $88.90

A fairly quiet session as month-ends go with the dollar clawing back some of its recent losses, dipping back to test support at 1.4360/65. Mostly window-dressing at month-end with few strong themes to key in on in today’s trade.

USD/JPY was briefly slammed by month-end sales, falling to 76.40 from 76.84 before drifting back into the range, ending at 76.58.

CAD weakened after an unexpected drop in Q2 GDP while AUD held up well, probing above 1.07 again in NY trade before stalling.

The Swiss franc rose after the government said “we’ll have to learn to live” with the strong franc. The SNB took no new measures today after doing so the prior three Wednesdays.

US DATA: Aug farm prices +1.1%.

Piraeus Bank the latest.

Where does the Bank of Greece get the euros it lends to the banks? From thin air. Call it QE dio.

WASHINGTON (MNI) – The U.S. Energy Information Administration
Wednesday issued the following:

Gasoline Consumption: How did we get here?

With the upcoming Labor Day weekend marking the end of the peak
driving season in the United States, it is a good time to review recent
trends in U.S. gasoline consumption, which accounts for about 10 percent
of total global oil demand. The U.S. Energy Information Administration
(EIA) data indicate gasoline consumption in the first six months of 2011
was 2 percent lower than in the same period in 2010. Economic growth,
gasoline prices, and vehicle fleet efficiency are three key determinants
of gasoline use. Economic growth and prices impact vehicle miles
traveled, while fleet efficiency, which changes only slowly based on
efficiency of new vehicles relative to the efficiency of the existing
fleet and the rate of fleet turnover, links miles traveled to fuel use.
Higher gasoline prices in 2011 compared to the same period in 2010
appear to be the main driver behind the recent drop in gasoline demand.
The impacts of increased economic activity and increased vehicle
efficiency, which move gasoline demand in opposite directions, were each
about half the size of the impact of higher prices, and taken together
the two effects were largely offsetting.

In May 2011, when prices eclipsed $4 per gallon in some areas of
the country for the first time since August 2008 (though the national
average price topped out at $3.97 per gallon), questions regarding the
robustness of U.S. gasoline demand moved to the foreground. After a
significant decline in 2008 brought about by rising prices and economic
recession, gasoline consumption stagnated. June 2009 marked the first
time in 21 months that U.S. gasoline consumption posted growth relative
to the year-earlier monthly level. Notwithstanding a soft patch in the
first quarter of 2010, gasoline consumption averaged growth of about 35
thousand barrels per day (bbl/d), or 0.4 percent relative to the
year-earlier monthly level from June 2009 through the end of 2010, with
growth particularly strong in the third quarter of 2009.

As crude oil prices rose following their sharp decline from July to
December 2008, so too did gasoline prices. Retail prices for U.S.
regular-grade gasoline rose from a low of $1.61 per gallon at the end of
December 2008 to $3.05 per gallon at the end of December 2010. By late
2010, U.S. gasoline demand growth had begun to weaken. November 2010
consumption showed a 90 thousand bbl/d decline relative to the
year-earlier monthly level; since then, gasoline consumption has shown
year-over-year declines in 7 of the last 8 months.

In early 2011, unrest in the Middle East and North Africa,
particularly a near-total disruption in Libyan crude exports, caused
crude oil prices to extend their gains of 2010. In addition , widespread
refinery outages in the United States, both planned and unplanned,
caused U.S. gasoline prices to rise even faster than crude prices,
amplifying the typical seasonal increase in refiner gasoline margins
across the country (margins reflect the difference between the gasoline
wholesale price and the average cost of crude oil). By early May, those
supply-side pressures had lifted average U.S. retail gasoline prices to
$3.97 per gallon in EIA’s weekly survey.

The sharp rise in gasoline prices since the end of 2010 appears to
have taken a toll on U.S. gasoline consumption. From January through
June, consumption averaged about 180 thousand bbl/d (2.0 percent) lower
than the same period in 2010. Since then, gasoline prices retreated
somewhat, falling 34 cents from their May 9 high of $3.97 per gallon to
$3.63 per gallon as of August 29. Available weekly data for July and
August indicate that gasoline consumption was about 150 thousand bbl/d
(1.6 percent) lower than in the same period in 2010, suggesting
continued weakness in domestic motor gasoline markets.

Looking into the role of the three key determinants of consumption

Gasoline consumption has fallen despite modest economic growth,
driven by population, output, income, and employment expansion — a
combination that, under stable price conditions, would normally lead to
increasing gasoline consumption. Real (inflation-adjusted) GDP for the
first six months of 2011 is estimated to be 1.9 percent higher than for
the same period in 2010. According to the EIA’s Short-Term Energy
Outlook (STEO) model, the short-term income elasticity for vehicle miles
traveled is about 0.5 (meaning a 1-percent increase in income results in
a 0.5-percent increase in miles traveled and gasoline consumption). This
elasticity estimate implies motor gasoline consumption this year should
have been 0.9 percent higher than the same period in 2010, assuming no
year-over-year change in gasoline prices or the fuel efficiency of the
vehicle fleet.

In its STEO model, EIA estimates the short-term elasticity of
vehicle miles traveled with respect to the price of gasoline is about
-0.07 (a 1-percent increase in prices leads to a 0.07 percent decline in
highway travel). The average pump price of regular-grade gasoline during
the first six months of 2011 was 28 percent higher than the same period
last year. Motor gasoline consumption would therefore have been 2.0
percent lower than in 2010, assuming no year-over-year change in
economic activity or improvement in the average efficiency of the
vehicle fleet.

Taken together, the estimated net effect of income and price
changes and their respective elasticity estimates during the first half
of 2011 imply a 1.1-percent decline in gasoline consumption over the
comparable year-ago period. However, the estimated average fuel
efficiency of the in-use vehicle fleet rose by roughly 1.0 percent in
the first half of 2011 compared to the comparable year-ago period based
on a calculation made using total gasoline consumption reported by EIA
and total highway miles travelled reported by the Federal Highway
Administration. Therefore, the combined effect of the income, price, and
fuel efficiency impacts as modeled by EIA would be a 2.1 percent decline
in consumption, similar to the 2.0-percent year-over-year decline
reported for January through June 2011.

Gasoline and diesel prices move higher

The U.S. average retail price of regular gasoline increased this
week, adding almost a nickel to reach $3.63 per gallon. The average
price is $0.95 per gallon higher than last year at this time. The
largest increase came in the Midwest where prices were a dime higher
than last week. Several unanticipated refinery outages in the region
likely boosted the average there. The price on the West Coast gained
almost six cents to $3.75 per gallon, the most expensive regional
average in the country. The Gulf Coast, Rocky Mountains, and East Coast
prices all moved up about a penny on the week.

The national average diesel price increased for the first time in
five weeks, climbing a penny to $3.82 per gallon. The diesel price is
$0.88 per gallon higher than last year at this time. The West Coast
average price jumped more than five cents, the largest increase for the
week. The Rocky Mountains followed, adding more than two cents to last
week’s price, while the Midwest average rose more than a cent. Moving in
the other direction, both the Gulf Coast and East Coast regions
experienced price declines of less than a penny.

** Market News International Washington Bureau: 202-371-2121 **

[TOPICS: M$U$$$,MI$OI$,MAUDS$]

US DATA: July BLS metro area unemployment data came out earlier, showed
unemployment rates were lower in July than a year earlier in 257 of the
372 metropolitan areas, higher in 94 areas, and unchanged in 21 areas.

Who do you hire to leave the euro zone. The law firm of Dewey, Screwem and Howe?

Apparently that rumor is what knocked us to session lows but has since been denied…

• Not sure Fed can control all factors
• Quantitative easing works bets when in response to deflation threat or clear drift toward recession
• Would have to evaluate lengthening maturities in Fed portfolio; has the advantage of not increasing balance sheet

Lockhart is not a voter on the FOMC this year…

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