October 8th, 2010 18:40:18 GMT

USD/JPY on the recovery trail

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Probably a case of cold feet ahead of this weekend’s international gabfest on Washington.

Look for offers into this strength just above the market, in the 82.10/20 area.

What is to come from this weekend’s meetings? No grand deal to rebalance the world’s exchange rate regime.

Perhaps the US and EU will look the other way and allow the MOF to try and boost USD/JPY from 15-year lows to try and spark the world’s second (or third), depending on who’s counting) economy back to life. USD/JPY’s weakness is not suddenly gonna cause Japanese consumers to buy Buicks, so the US has little to lose if USD/JPY is 80 or 90…It really won’t make a material difference to us.

EUR/JPY is miles below the 200-week average ( rough estimate of fair value) which is up at 142.00, si Europe has little to squawk about either. Whether intervention works or not, that’s an entirely different story…

8 Comments

October 8th, 2010 17:45:36 GMT

ECB’s Noyer/France Finmin Lagarde:Shldn’t Talk About FX ‘War’

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By Yali N’Diaye

WASHINGTON (MNI) – European Central Bank Governing Council Member
Christian Noyer and France Finance Minister Christine Lagarde spoke out
Friday against the notion of a foreign exchange ‘war,’ preferring
instead to focus on the need for cooperation at a time the world is in
need of confidence.

“We must stop talking about war,” Lagarde said at a news conference
following the annual meeting of the International Monetary Fund and
World Bank.

“The world currently needs confidence, cooperation,” added Noyer.
“It’s by bringing back confidence and ensuring coordination between our
economic policies, a determined action to go in the direction of a
better balanced world growth, a better distribution of consumption and
investment worldwide that we will achieve a higher growth and employment
level everywhere.”

“So I agree 100% with Mrs Lagarde,” he said. “No war and
cooperation and building a better world together.”

The question of rebalancing should be considered in its entirety
and not reduced to the foreign exchange issue, both told reporters, who
repeatedly tried to get the two officials to be more specific on the
rebalancing of currencies.

Declining to directly comment on the issue of the Chinese yuan or
remarks made by U.S. Treasury Secretary Timothy Geithner, who Friday
again deplored interventions in FX markets by countries with undervalued
currencies, Lagarde stressed the rebalancing issue is a long term one
that won’t be solved “overnight.”

There are clearly imbalances, she said, and they need to be
addressed through the appropriate level of dialogue and consultation.

She underlined that all the G-20 countries share the desire for
better stability, less volatility and strong balanced growth.

The foreign exchange issue is a question of “common interest,”
Noyer added, stating that “excess volatility and abrupt development are
counter productive for the world’s growth.”

Asked whether there was a need for rebalancing within the euro
zone, Noyer said, “As a whole the euro area is approximatively balanced
in terms of current accounts.”

That doesn’t mean governments “should do nothing,” he added,
urging them to take the necessary steps to “enhance growth,” such as
structural reforms.

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

[TOPICS: MGX$$$,M$U$$$,MN$FX$,MI$$$$,M$$CR$]

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October 8th, 2010 17:19:02 GMT

Zhou: Stimulus may create inflation, bubbles

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People’s Bank of China (the central bank) chief Zhou says that the Chinese stimulus package may create some inflationary pressures and bubbles. (Other than that, it’s working like a charm!)

Zhou said a short while ago that the dollar is still the world’s most important reserve currency.

2 Comments

October 8th, 2010 16:55:15 GMT

US Tsy Econ: Job Situation Improving Despite High Unemp Rate

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By Ian McKendry

WASHINGTON (MNI) – U.S Treasury Chief Economist Alan Krueger said
September’s jobs report showed the economy is healing and that a
double-dip back into recession is unlikely despite a lingering high
unemployment rate.

“What I see in these number is that the economy is continuing to
heal,” Krueger said Friday at the Treasury Department in a monthly
briefing with reporters.

“I think it’s clear that the actions the administration and
Congress have taken have put the brakes on the steep slide the economy
was going through,” Krueger added.

Krueger, taking a glass half-full approach, said the headline
number of a decline of 95,000 workers was not as important as the 64,000
gain in private sector jobs in September.

“I don’t read this as an indication that the economy is weakening,”
Krueger said.

Krueger did caution, however, that the unemployment rate is likely
to remain high for a while.

“We are starting from a very deep whole and movements in the
unemployment rate will be very gradual” Krueger said.

Krueger said job growth lags behind economic growth in modern
recoveries, and that in the current recovery job expansion has come
earlier than normal.

“In the current recovery, job growth has started six months after
the date the NBER [National Bureau of Economic Research] said was the end
of the recession, so by that standard, job growth has come earlier.”

On the foreclosure crisis, Krueger said prices have stabilized and
“are not going to continue to slide.”

Krueger also said the administration can accelerate employment
gains.

The Treasury Department Friday released an update on the Obama
Administration’s HIRE Act Tax Credit which provides incentives for
employers to hire long-term unemployed.

The tax credit is set to expire at the end of the year which the
Treasury Department said should encourage businesses to accelerate
hiring in order to take advantage of its benefits.

“Targeted programs like the HIRE Act tax credit provide an
incentive for private-sector employers to hire new workers sooner than
they otherwise would,” Krueger said in a release earlier Friday.

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

[TOPICS: MAUDS$,M$U$$$,M$$CR$,MGU$$$]

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October 8th, 2010 16:54:42 GMT

PBOC’s Zhou:Currency adjustment will be gradual

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  • No “shock therapy” , central bank chief says
  • China pursuing a package of policies including boosting internal demand, better social security system (which would require less personal savings) and exchange rate reforms

Faster please!

UPDATE at 17:13 GMT: Zhou says USD  still most important reserve currency…

3 Comments

October 8th, 2010 16:39:52 GMT

Juncker: Time not ripe for currency deal

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Brazil thinks the time is right for a currency deal but Europe does not, according to Eurogroup head Juncker. Juncker says the ideal forum for currency discussions should be the G7 plus China (no discussion for you, Brazil!)

Major currency issuers should ensure currency peace, according to the Juncker, who is also the PM an FinMin of Luxembourg.

Juncker calls for the US, Eurogroup, Japan and China to engage in ongoing discussions…

1 Comment

October 8th, 2010 16:04:41 GMT

EUR losing more ground on crosses than versus dollar

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The euro has been rallying strongly versus the likes of JPY and GBP of late but we’ve seen significant retrenchment today.

The euro continues to give ground against both those crosses. EUR/JPY is down to 113.90 from 115.65 just yesterday.

EUR/GBP is down to 0.8717 after retesting yesterday’s 0.8805 highs and failing. In fact, EUR/GBP has triggered my favorite pattern, the double top. The downside objective is 0.8655.

10-8 eurgbp

11 Comments

October 8th, 2010 15:55:18 GMT

ECB’s Bini Smaghi: Timing Of Further Exit Depends On Markets

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WASHINGTON (MNI) – The pace of the European Central Bank’s
unwinding of non-conventional measures will depend on further financial
market improvements, ECB Executive Board member Lorenzo Bini Smaghi said
Friday.

“The exit depends on underlying conditions,” Bini Smaghi said
during a panel discussion here on coordinated exit strategies across
different regions. “If the economy improves — to some extent
endogenously — the markets will ask for less. And that is what we are
observing.”

Bini Smaghi said he did not “believe in a theory that you have to
force market participants to hold much more liquidity,” questioning
whether such liquidity would be pumped into the real economy.

The Executive Board member also observed that banks have so far
adjusted very well to the expiration of liquidity operations and
confirmed that interest rates remain “appropriate” after the ECB left
its refi rate unchanged at 1.0% again on Thursday

–Frankfurt bureau tel.: +49-69-720142. Email: jtreeck@marketnews.com

[TOPICS: M$$EC$,M$X$$$,M$$CR$,MGX$$$,MFX$$$$]

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October 8th, 2010 15:45:34 GMT

Canada FinMin: China Must Do More on Currency Flexibility

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WASHINGTON (MNI) – China needs to do more to allow its currency to
be more flexible, Canadian Finance Minister Jim Flaherty said Friday,
adding that it is neither in China’s interest to have a currency or
trade war nor the interest of western nations to have “impediments” to
trade.

Volatility in his country’s own currency is “always a concern,” the
minister told Canadian TV station Global TV and journalists gathered
outside the headquarters of the International Monetary at the start of
the annual meetings.

“We’re all committed to free trade according to the Toronto
summit,” Flaherty said.

But, “One of the barriers to trade is artificially protecting
a … currency, which is the situation with some of the Asian currencies
now, including China,” he said.

“And China had committed before the G20 summit in Toronto” to allow
more flexibility, and while “they’ve allowed a very small degree of
flexibility since Toronto, but they need to do more,” he said.

“The reality is that China and other Asian economies need western
markets to sell their goods and it is not in their interest to have a
trade, or currency war,” he said.

All participants at the IMF and World Bank meetings taking place
this weekend are “worried about economic growth.” At present, “we see
significant growth” in emerging markets, but growth in developed markets
is “quite modest,” he said.

** Market News International – tbuell@marketnews.com **

[TOPICS: M$C$$$,MI$$$$,MN$FX$,M$U$$$,M$Q$$$,MFU$$$,MFX$$$]

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October 8th, 2010 15:45:33 GMT

Excerpt: US CEA’s Goolsbee: Can’t Read Too Much Into Jobs Rprt

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WASHINGTON (MNI) – The following are excerpts from a statement by
the chair of President Obama’s Council of Economic Advisers, Austan
Goolsbee Friday on September’s non-farm payrolls report:

Today’s employment report shows that private sector payrolls
increased by 64,000 in September, continuing nine consecutive months of
private sector job growth. This growth provides more evidence that the
economy continues to recover, but we must do more to put the economy on
a path of robust economic growth. At the same time, the rate of job
growth is not as large as needed to bring the unemployment rate down
quickly, as the unemployment rate remained at 9.6%.

Given the volatility in the monthly employment and unemployment
data, it is important not to read too much into any one monthly report.
Rather, we must remain focused on our efforts to encourage robust
economic growth that will also bring strong employment growth. The
President continues to work with his economic team and looks forward to
working with Congress when they return to identify measures to speed the
recovery.

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

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

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