Yen Is Near 1-Week Low as Global Stimulus Reduces Haven Demand

Dec. 9 (Bloomberg) -- The yen traded near a one-week low against the euro on speculation official efforts to tackle the global economic crisis will boost Asian stocks and reduce the Japanese currency’s appeal as a safe haven.

The yen was near a one-week low against the New Zealand dollar after Governor-General Anand Satyanand said the nation will cut taxes and boost construction to spur growth. Congress and the administration of President George W. Bush negotiated a $15 billion rescue of U.S. automakers. The euro fell against the dollar before German economic sentiment data that may show pessimists outnumbered optimists for the 17th month.

“Stock markets are settling down and that may put some pressure on the yen to weaken,” said Tsutomu Soma, a bond and currency dealer at Okasan Securities Co. in Tokyo. “Various stimulus measures and the prospects for a bailout for U.S. carmakers are helping sentiment.”

The yen traded at 120.06 per euro as of 8:11 a.m. in Tokyo from 120.26 late yesterday in New York, when it fell to 120.96, the lowest since Dec. 1. Against the dollar, it was little changed at 92.95. The euro declined to $1.2920 from $1.2963.

Japan’s currency traded at 50.77 per New Zealand dollar, little changed from late yesterday in New York, when in declined to a one-week low of 51.21. In carry trades investors obtain funds in a country with low borrowing costs and buy assets where returns are higher. Japan’s 0.3 percent target rate compares with 2.5 percent in Europe and 5 percent in New Zealand.

Stocks Gain

The Standard & Poor’s 500 Index jumped 3.8 percent yesterday. Japan’s yen traded in the opposite direction of the index more than 90 percent of the time in the past month, data compiled by Bloomberg show.

Implied volatility on one-month dollar-yen options fell for a fifth straight day, dropping to 20.46 percent, indicating investors see less price fluctuation in the currency pair next month. The index jumped to 41.79 percent on Oct. 24, the highest level since 1995, when Bloomberg started to compile the data. A drop in volatility reduces the risk of the carry trade by making profits easier to predict.

New Zealand will cut income taxes by NZ$4.4 billion ($2.4 billion), increase road and school construction to help the economy out of recession, the government said today.

In an NBC television interview on Dec. 7, Obama reiterated his commitment to the biggest investments in the nation’s infrastructure since the 1950s. The U.S. president-elect takes office Jan. 20. The European Union proposed a 200 billion euro ($258 billion) stimulus package last month.

U.S. Automakers

Congressional lawmakers met yesterday and over the weekend to work out a rescue package for the big U.S. automakers, General Motors Corp., Chrysler LLC and Ford Motor Co. The rescue plan, which will offer automakers $15 billion in loans intended to help them survive at least until March, is likely to be passed and signed into law this week, House Financial Services Committee Chairman Barney Frank said yesterday.

Investor confidence in German’s economy, Europe’s largest, worsened in December, the ZEW Center for European Economic Research’s index of investor and analyst expectations will probably show today. The index fell to minus 57 from minus 53.5 in the previous month, according the median estimate of 38 economists in a Bloomberg News survey.

FCPO Commentary on 09/12/08

FCPO February futures contract rose RM37 higher compare to previous trading session and close at RM1499 with a total 7829 lots traded in the market. CPO price recovered despite of crude oil plunge during overnight trading session.

Technically, CPO price manage to hold against the selling pressure above the support level at RM1410 after been tested the 3rd time on 78.6% Fibonacci retracement figures and C wave complete and 161.8% Fibonacci projected figures. Traders were advice to hold long position in the coming trading session for long term positioning as we expect CPO price would be riding on bull rally in the coming trading session. However, critical support levels at RM1400 must not be violated in the coming trading session. Resistances were seen at RM1510 and RM1580 region.

FKLI Commentary on 09/12/08

FKLI November contract close marginally 1.5 points lower compare to previous trading session at 841.5 with a total of 3008 lots traded in the market. FKLI was traded sideways during trading session due to long public holidays ahead despite world indices remain open on Monday.

Technically, FKLI seems traded in the symmetric triangle in the hourly while remain supported above 78.6% Fibonacci figure at 830 levels. We expect FKLI would traded higher towards 877 region provided if support levels at 830 and 805 were not violated. Traders were would advice to hold long position in the coming trading session while being cautious around the resistances level at 860 and 877 region.

Oil May Fall Below $25 Next Year, Merrill Lynch Says

Dec. 4 (Bloomberg) -- Crude oil may dip below $25 a barrel next year if the recession that’s slashing fuel demand around the world spreads to China, Merrill Lynch & Co. said.

Global oil demand will contract in 2009 as economic growth slows to its weakest since 1982, Merrill Commodity Strategist Francisco Blanch said in a report today. In October, when oil was around $100 a barrel, the bank predicted that prices may slide to $50. Crude traded at $45.30 in New York today, the lowest since February 2005.

“A temporary drop below $25 a barrel is possible if the global recession extends to China and significant non-OPEC cuts are required,” Blanch said. “In the short-run, global oil demand growth will likely take a further beating as banks continue to cut credit to consumers and corporations.”

Crude hasn’t fallen below $25 a barrel on the New York Mercantile Exchange since November 2002.

Global oil demand has slumped as the U.S., Europe and Japan face simultaneous recessions for the first time since World War II. The number of Americans collecting jobless benefits rose to 4 million in the week to Nov. 22, a 26-year high, the Labor Department reported today. European Central Bank President Jean- Claude Trichet said the euro region’s economy will shrink in 2009.

$50 Average

Merrill reiterated a Nov. 26 forecast that oil futures traded in New York will average $50 a barrel next year. Prices “could find a trough” at the end of the first quarter and undergo a “modest recovery” in the second half as economies strengthen, according to today’s report.

“We expect strong cooperation to emerge” among members of the Organization of Petroleum Exporting Countries as prices fall below $50, Blanch said. OPEC, producer of more than 40 percent of the world’s crude, was still pumping about 1 million barrels a day more than its official target of 27.3 million barrels a day last month, according to a Bloomberg survey.

Producers in Canada may shutter almost 800,000 barrels a day if prices decline below $35 a barrel, Blanch added.

Merrill’s $50-a-barrel assessment for 2009 is the second- lowest among 32 analyst estimates compiled by Bloomberg, after a prediction of $43.13 by ANZ Banking Group Ltd. issued on Nov. 18.