CFD Markets News and Forecasts — 13-01-2011

Fed policies have contributed to stock strength and rates are higher due to stronger econ expectations.

The euro rose versus all of its major counterparts as traders speculated that European Union leaders will step up efforts to contain the region’s debt crisis and demand rose at Spain’s debt sale.
Spain sold 3 billion euros ($3.9 billion) of five-year bonds in its first debt auction of the year, meeting its maximum target. Demand was 2.1 times the amount sold, compared with 1.6 times at the previous sale. Italy sold 6 billion euros of bonds due in 2015 and 2026.
The 17-nation currency had its biggest four-day gain versus the dollar since September as European Central Bank President Jean-Claude Trichet signaled an increased risk of inflation.
Trichet signaled he’s prepared to raise interest rates if needed to fight inflation even as leaders struggle to contain the region’s sovereign debt crisis.
The dollar dropped versus the yen as U.S. jobless claims rose to the highest level since October.
U.S. initial jobless claims rose in the first week of 2011 to 445,000, the highest level since October, the Labor Department reported. Separate reports showed the producer price index rose last month by the most in 11 months, while the trade deficit unexpectedly narrowed in November.
“The claims only reminded traders of the difficult road ahead,” said Kathy Lien, director of currency research at the online currency trader GFT Forex in New York. “The PPI and trade balance numbers should be bullish for the dollar, but that was offset by the shockingly high level of jobless claims.”

DB considers what it'd take to lower the unemployment rate, concluding US needs to gain about 200k jobs per month to get improvement, assuming lower labor force participation. They are projecting 8.8% unemployment by yearend.

-- Evidence of S-T up pressure on infl -- Upward infl pressure due mainly energy -- See price stability over policy horizon -- Data consistent w/positive econ momentum -- Uncertainty elevated -- M-T infl pressures contained -- Infl expectations firmly anchored -- Firm anchoring of expectations of essence -- Current pol stance accommodative -- To adjust policy as appropriate -- All nonstandard measures temporary -- To monitor all devels very closely -- Recent data,surveys confirm positive econ momentum -- 2011 exports shld benefit from world recovery -- Biz confidence relatively high in emu -- Accom monpol shld support private demand -- Recovery to be damepened by bal sheet adjustment -- Risks to econ are still slightly downside -- Uncertainty elevated -- Global trade may grow faster than expected

Seasonal factors had expected large rise in NSA claims; 22.7%, or 131,000, because prior 2 wks had Federal holidays and 2nd wk of Jan always the highest wk for NSA claims. Actual NSA claims +33%, or +191,686, to 770,413. Issue is 'timing' not magnitude, analyst says. The 4-wk moving avg +5,500 to 416,500. Cont. claims -248k to 3.879m in Jan. 1 wk; lowest since Oct 25, 2008.

Driving rise in overall was finished energy prices (+3.7%); within that gasoline +6.4%. Finished consumer foods +0.8%. Rise in PPI core fueled by cigarettes (+2.9%). Ex-energy, overall PPI +0.3%.

In exports civ aircraft +$420m and pharma +$981m were key. In imports, crude oil +$1.9b (unit price +3.5%/bbl but quantity also gained) was offset by -$427m autos and -$912m pharma. Services surplus of $12.9b was a record as services imports fell $0.3b on lower transport/travel costs. Oct-Nov real trade is showing an almost 10% improvement from the Q3 avg, enough to add substantially (in area of 1-2 pts) to real GDP growth. NSA trade bal by country: with China -$25.6b vs -$25.5b Oct as exports moved to highest on record, Japan -$5.8b vs -$5.7b, OPEC -$7b vs -$5.7b. Asia and oil remain problems.

 - Min. bid rate at refi tender remains at 1.00%

 - Marginal lending rate 1.75%, Deposit rate 0.25%

 * Focus turns to the ECB press briefing which begins at 1330GMT.

US data starts at 1330GMT with weekly jobless claims data, trade data and also PPI. 
Initial jobless claims are expected to fall 3,000 to 406,000 in the January 8 week. 
The international trade gap is forecast to widen to $41.0 billion in November after narrowing to $38.7 billion in October. Analysts will be watching the data closely to help set up their 4Q GDP forecasts. 
Meanwhile, producer prices are expected to jump 0.9% in December. The core PPI is expected to rise 0.2%, as the power to pass on higher input prices remains very weak.

The euro held three days of gains against the dollar amid optimism European leaders may take action to quell the region’s debt crisis.
The franc weakened against its 16 most traded counterparts after Swiss central bank Vice President Thomas Jordan said the currency’s renewed ascent against the euro is posing a threat to economic growth.
Australia’s dollar fell after a government report showed the nation’s employers added fewer jobs in December than economists predicted. South Korea’s won strengthened to a two-month high after policy makers lifted borrowing costs to curb inflation.

Italy sold E6.0b;n BTPs vs max indiative E6.0bn
- E3.0bln of 3.00% Nov 2015 BTP; average yield 3.67%, cover 1.412
- E3.0bln of 4.50% Mar 2026 BTP; average yield 5.06%, cover 1.42

Spain sold E2.999bln vs indicative E2.0-3.0bln
- E2.999Xbln of 3.25% Apr 2016 Bono, cover 2.1 times vs previous 1.61
- Sold  3.25% Apr 2016 Bono at avg yield 4.542% vs previous 3.58%.

EUR/USD: $1.3200, $1.3125, $1.3115, $1.3050, $1.3000, $1.2950
USD/JPY: Y82.50, Y82.85, Y83.25, Y84.00
EUR/JPY: Y106.80
USD/CHF: Chf0.9750, Chf0.9600

The euro holds higher before bond sales.
Yesterday Portugal sold 599 million euros ($778 million) of bonds due in 2020 at a yield of 6.716 percent, the country’s debt management agency said today. That compares with 6.806 percent at the previous auction on Nov. 10. Investors asked for 3.2 times the amount of 10-year bonds sold, up from 2.1 times at the November sale. Spain and Italy will sell bonds tomorrow.
European leaders are contemplating aid for Portugal, debt buybacks, lower interest rates on rescue loans and guarantees against excessive debt, according to two people with direct knowledge of the talks.
The plan, which may include a loan to Portugal of about 60 billion euros ($78 billion) and purchases of outstanding Greek debt, would mark an attempt to contain the crisis that has frustrated unprecedented efforts by policy makers to calm markets and raised questions on the health of the euro economy.
Euro-area finance ministers will discuss elements of the package next week, though the debate is so sensitive in Germany that decisions may wait until a scheduled summit of political leaders on Feb. 4, said the people, who declined to be named because the deliberations are private.

EUR/USD printed lows at $1.3090 before recovered to $1.3140.
GBP/USD holds within $1.5714/$1.5780.
USD/JPY also between Y82.90/Y83.14.

UK data for Thursday at 0930GMT includes industrial production and manufacturing output, where IP is seen rising 0.7% m/m, 3.4% y/y and the manufacturing measure is expected to rise 0.5% m/m, 5.4% y/y.
The European day is dominated by policy decisions from the Bank oF England at 1200GMT and the ECB at 1245GMT. Neither of the central banks are expected to deliver a change in policy with the Bank of England MPC still split.
However, the usual post-meeting press conference by ECB President Jean-Claude Trichet will be as closely-watched as ever amid the recent peripheral bond buying by the ECB and ongoing concerns over the peripheral markets.
US data also starts at 1330GMT with weekly jobless claims data, trade data and also PPI.
Initial jobless claims are expected to fall 3,000 to 406,000 in the January 8 week.
The international trade gap is forecast to widen to $41.0 billion in November after narrowing to $38.7 billion in October. Analysts will be watching the data closely to help set up their 4Q GDP forecasts.
Meanwhile, producer prices are expected to jump 0.9% in December. The core PPI is expected to rise 0.2%, as the power to pass on higher input prices remains very weak.

Majors' close
Nikkei 225 +2.12 +0.02% 10,512.80
FTSE 100 +36.69 +0.61%     6,050.72
CAC 40     +83.15     +2.15%     3,945.07
DAX +127.21 +1.83% 7,068.78
Dow +83.48 +0.72% 11,755.36
Nasdaq +20.50 +0.75% 2,737.33
S&P 500 +11.45 +0.90% 1,285.93
Treasuries +0.0110-year yield 3.35%
Oil +0.59 $91.70

Japan’s Topix index rose, led by banks, on speculation Bank of Japan Governor Masaaki Shirakawa’s appointment as vice chairman of the Bank for International Settlements will benefit the nation’s lenders.


Mitsubishi UFJ Financial Group Inc., Japan’s largest bank by market value, jumped 3.6 percent. A gauge of bank shares was the biggest support for the Topix among the index’s 33 industry groups. Ube Industries Ltd., a chemical-products maker, leapt 6.2 percent after the Nikkei newspaper said profit will likely beat the company’s forecast. Fanuc Corp., an industrial-robot manufacturer that gets more than 75 percent of its sales overseas, fell 0.5 percent, reversing early gains as the yen strengthened in the afternoon.

European stocks advanced for a second day, extending a 28-month high, as investors speculated that the European Union will increase its efforts to contain the region’s debt crisis.


Intesa Sanpaolo SpA jumped 10 percent, leading banking shares higher across Europe as Portugal sold 10-year bonds. Sky Deutschland AG surged 31 percent after it won more funding from its parent company, News Corp. European Aeronautic Defence & Space Co. rose 2.1 percent after its Airbus SAS unit won the biggest order in commercial aviation history.
Portugal sold 599 million euros ($783 million) of 10-year bonds at an average yield of 6.716 percent today, compared with a yield of 6.806 percent at the previous sale on Nov. 10. The auction was the first debt sale by any of the euro region’s most indebted countries this year.
EU officials are trying to forge a “comprehensive” plan to contain the currency area’s sovereign-debt crisis, Economic and Monetary Commissioner Olli Rehn said today.
Japan may extend its purchases of bonds sold by a European financial aid fund beyond January as it seeks to support the region’s recovery from the sovereign-debt crisis, two government officials familiar with the matter said.

U.S. stocks rose, sending benchmark indexes to the highest since August 2008, as Wells Fargo & Co. raised its rating for large banks on dividend prospects and amid speculation Europe will step up measures to control its crisis.
Bank of America Corp. and Citigroup Inc. gained at least 1.6 percent.
JPMorgan Chase & Co. added 2.5 percent after Chief Executive Officer Jamie Dimon told CNBC that he would like to boost the company’s dividend.
Canada’s Consolidated Thompson Iron Mines Ltd. soared 33 percent after Cliffs Natural Resources Inc. agreed to buy the company for about C$4.9 billion ($4.95 billion).
Nvidia Corp. jumped 11 percent after Oppenheimer & Co. predicted a “good year” for the industry’s earnings.
The S&P 500, which is up for a second day, has soared 90 percent from its March 2009 low amid government measures to stimulate the economy and as corporate profits exceeded forecasts. Companies in the benchmark gauge posted higher-than- estimated results in all three quarters reported so far for 2010, and analysts predict profit will increase 14 percent in 2011

The euro advanced for a third day versus the dollar as Portugal’s borrowing costs fell at an auction and on speculation European leaders are considering an expansion of aid for nations struggling to finance their debt.
Portugal sold 599 million euros ($778 million) of bonds due in 2020 at a yield of 6.716 percent, the country’s debt management agency said today. That compares with 6.806 percent at the previous auction on Nov. 10. Investors asked for 3.2 times the amount of 10-year bonds sold, up from 2.1 times at the November sale. Spain and Italy will sell bonds tomorrow.
The 17-nation currency rose against most of its major counterparts as investors exited bets that it would weaken before a meeting of euro-area finance ministers next week.
European leaders are contemplating aid for Portugal, debt buybacks, lower interest rates on rescue loans and guarantees against excessive debt, according to two people with direct knowledge of the talks.
The plan, which may include a loan to Portugal of about 60 billion euros ($78 billion) and purchases of outstanding Greek debt, would mark an attempt to contain the crisis that has frustrated unprecedented efforts by policy makers to calm markets and raised questions on the health of the euro economy.
Euro-area finance ministers will discuss elements of the package next week, though the debate is so sensitive in Germany that decisions may wait until a scheduled summit of political leaders on Feb. 4, said the people, who declined to be named because the deliberations are private.
Chancellor Angela Merkel indicated that Germany is ready to revise the terms of a 750 billion-euro ($973 billion) rescue fund for indebted states, saying Europe’s biggest economy will do whatever is necessary to protect the euro.

EUR/USD initially fell to the lows around $1.2960 before rose to $1.3140.

GBP/USD also rose from $1.5580 to $1.5780 before retreated to $1.5750.

USD/JPY fell from Y83.50 to Y82.75 before it was back to Y83.00.

UK data for Thursday at 0930GMT includes industrial production and manufacturing output, where IP is seen rising 0.7% m/m, 3.4% y/y and the manufacturing measure is expected to rise 0.5% m/m, 5.4% y/y.
The European day is dominated by policy decisions from the Bank oF England at 1200GMT and the ECB at 1245GMT. Neither of the central banks are expected to deliver a change in policy with the Bank of England MPC still split.
However, the usual post-meeting press conference by ECB President Jean-Claude Trichet will be as closely-watched as ever amid the recent peripheral bond buying by the ECB and ongoing concerns over the peripheral markets.
US data also starts at 1330GMT with weekly jobless claims data, trade data and also PPI.
Initial jobless claims are expected to fall 3,000 to 406,000 in the January 8 week.
The international trade gap is forecast to widen to $41.0 billion in November after narrowing to $38.7 billion in October. Analysts will be watching the data closely to help set up their 4Q GDP forecasts.
Meanwhile, producer prices are expected to jump 0.9% in December. The core PPI is expected to rise 0.2%, as the power to pass on higher input prices remains very weak.

Resistance 3:Y85.80
Resistance 2:Y84.50
Resistance 1:Y83.60
Current price: Y83.08
Support 1:Y82.60
Support 2:Y81.60           
Support 3:Y80.80   

Comments: Rate holds within a range. Support is at recent lows at Y82.60, then - at Y81.60/65 (Jan 04 lows). Break above opens the way to 2-days channel at Y80.80. Resistance is near Y83.60 (23.6% Fibo of Y95.00 - Y80.20). Above the target is at Y84.50 (Dec 15 high). Key level is around Y85.80 (38.2%).

Resistance 3: Chf0.9920               
Resistance 2: Chf0.9850              
Resistance 1: Chf0.9750
Current price: Chf0.9682
Support 1: Chf0.9660
Support 2: Chf0.9600
Support 3: Chf0.9515/20

Comments: Rate holds at higher bound of a channel from June, limited by Chf0.8630/Chf0.9750 (strong support/resistance respectively). Current retreat may be a correction after the rate failed to break above Chf0.9750 (Chf0.9780 - Jan 11 high). Minor support is around yesterday's lows on Chf0.9660 with a break lower extend losses to Chf0.9600 (Jan 07 lows). Further support comes at Chf0.9515/20 (Jan 07 high). If rise resumes dollar may break Chf0.9750/80. resistance comes at Chf0.9850 (Dec 13 high).

Resistance 3: $1.5910
Resistance 2: $1.5810
Resistance 1: $1.5780
Current price: $1.5747
Support 1:$1.5680
Support 1: $1.5610
Support 2: $1.5500

Comments: Rate remains within the upward channel from Jan 07, limited today by $1.5610/$1.5810 (strong support/resistance respectively). In Asia rate set stable within the 15-points range. Minor resistance is around yesterday's highs at $1.5780 with a break above opens the way to $1.5810/20, then - to $1.5910 (Dec 14 high). Support comes at  yesterday's hourly highs on $1.5680 with stronger - at channel line on $1.5610. Below losses may extend to $1.5500 (38.2% Fibo of $1.4225 - $1.6290 rise).

Resistance 3:$1.3430
Resistance 2:$1.3220             
Resistance 1:$1.3150
Current price: $1.3105
Support 1:$1.3080             
Support 2: $1.3000
Support 3: $1.2900    

Comments: Rate tries to look optimistic, despite current retreat. Support is at $1.3080 (38.2% Fibo of $1.3430 - $1.2870). Stronger level is around $1.3000 (23.6%). Key support comes at channel line from Jun 07 at $1.2900 ($1.2870 - Jan 10 lows). Minor resistance is around $1.3150 (50%), then - at $1.3220 (61.8%). Stronger resistance is at $1.3430 (Jan 04 high).

Japan's benchmark stock indices ended Thursday's session higher. The Nikkei 225 ended up 79.96 points, or 0.73%, to stand at 10,589.76. The broader-based TOPIX was 7.83 points higher at 937.47.

Change % Change Last
Nikkei 225 +2.12 +0.02% 10,512.80
FTSE 100 +36.69 +0.61%     6,050.72
CAC 40     +83.15     +2.15%     3,945.07
DAX +127.21 +1.83% 7,068.78
Dow +83.48 +0.72% 11,755.36
Nasdaq +20.50 +0.75% 2,737.33
S&P 500 +11.45 +0.90% 1,285.93
Treasuries +0.0110-year yield 3.35%
Oil +0.59 $91.70

06:30     France     CPI (December) unadjusted         0.3%    0.1%
06:30     France     CPI (December) unadjusted Y/Y         1.7%    1.6%
06:30     France     HICP (December) Y/Y         2.0%    1.8%
07:00     Germany     Wholesale prices (December)         0.5%    0.7%
07:00     Germany     Wholesale prices (December) Y/Y         8.1%    7.8%
09:30     UK     Industrial production (November)         0.4%    -0.2%
09:30     UK     Industrial production (November) Y/Y         3.3%    3.3%
09:30     UK     Manufacturing output (November)         0.4%    0.6%
09:30     UK     Manufacturing output (November) Y/Y         5.4%    5.8%
12:00     UK     BoE meeting announcement         0.50%    0.50%
12:45     EU(17)     ECB meeting announcement         1.00%    1.00%
13:30     EU(17)     ECB press conference               
13:30     USA     Jobless claims (week to 08.01)         418K    409K
13:30     USA     PPI (December)         0.7%    0.8%
13:30     USA     PPI (December) Y/Y         -    3.5%
13:30     USA     PPI excluding food and energy (December)         0.2%    0.3%
13:30     USA     PPI excluding food and energy (December) Y/Y         -    1.2%
13:30     USA     International trade (November), bln         -40.2    -38.7
13:30     USA     Export (November), bln         -    158.7
13:30     USA     Import (November), bln         -    197.4
21:30     USA     M2 money supply (03.01), bln         -    +14
23:50     Japan     Corporate goods price index (December) domestic         -    0.1%
23:50     Japan     Corporate goods price index (December) domestic Y/Y         1.0%    0.9%