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Dollar, Euro, Pound & Yen

00:34 Tuesday 6 July, 2010

Stocks rallied, with the Standard & Poor’s 500 Index rebounding from a 10-month low, after global equities traded at the cheapest level relative to earnings since 2009 and a Spanish bond sale quelled concern the nation will struggle to fund its deficit. Oil climbed and the dollar fell.

The S&P 500 jumped 1.9 percent to 1,042.03 at 10:14 a.m. in New York. The MSCI World Index of stocks in 24 developed nations rose 2.4 percent, the most in three weeks. The Shanghai Composite Index gained 1.9 percent before Agricultural Bank of China Ltd.’s initial public offering. Oil surged 1.8 percent to top $73 a barrel. Treasuries were little changed while the dollar weakened against all 16 major currencies.

Analysts are raising earnings estimates for U.S. companies at the fastest rate since at least 2004, while the MSCI World of equities in 24 developed nations traded at 15 times reported earnings yesterday, the lowest level since March 2009. Spain’s IBEX 35 Index surged 4 percent as the nation sold 6 billion euros ($7.6 billion) in bonds, its first syndicated issue since February.

“The markets are oversold short-term and we’ve had a fair amount of weakness the last couple of weeks,” said Mark Bronzo, an Irvington, New York-based fund manager at Security Global Investors, which oversees $23 billion. “Now we’re about to get earnings. Most people feel earnings will be okay and maybe guidance will be a little conservative. You’ll see less shorting before earnings, that’ll give the market a lift.”

22:18 Tuesday 6 July, 2010

"If interest rates stay low and sterling stays a bit stronger, then we could come through this thing a bit quicker than people expect," Andy Brough from Schroders told CNBC Tuesday when discussing the UK economy. Damian Reece from Telegraph Media Group joined the discussion.

22:12 Tuesday 6 July, 2010

The most accurate foreign-exchange forecaster says the euro will continue to weaken and may approach parity with the dollar as the European Central Bank buys more government bonds to support the region’s economy.

Shaun Osborne, chief currency strategist at TD Securities Inc. in Toronto, said the euro will depreciate to $1.13 in the third quarter, $1.08 by year-end and may near $1 in 2011 before recovering. Osborne, whose predictions were within 4.1 percent of the mark on average, according to data compiled by Bloomberg, was echoed by the nine following most-accurate forecasters in anticipating a lower euro in the next two quarters.

The euro weakened 15 percent against the dollar in the first half on speculation record budget deficits from Ireland to Portugal and Greece will force governments to cut spending and reduce economic growth. Bond yields among the euro-area’s so- called peripheral nations surged relative to German bunds even as European Union leaders crafted an almost $1 trillion aid package to avoid sovereign defaults.

“It’s going to be an immensely challenging environment for these economies to try and regain competitiveness internally within the euro zone,” said Osborne, 47, who has been head of currency strategy at TD Securities since he joined in 2006 from Scotia Capital. “The ECB is moving towards its version of quantitative easing. It suggests they’re going to be very late now to the tightening cycle.”

22:07 Tuesday 6 July, 2010

Stocks rose, with the Stoxx Europe 600 Index snapping the longest losing streak in a year, after shares traded at their cheapest level relative to earnings since 2009. European bond yields increased and the yen weakened.

The Stoxx 600 rallied 2.6 percent at 8:24 a.m. in New York, while the MSCI World Index advanced 1.2 percent. Spain’s IBEX jumped 3.5 percent as the nation prepares to sell bonds. Futures on the Standard & Poor’s 500 Index climbed 1.4 percent. The Shanghai Composite Index gained 1.9 percent before Agricultural Bank of China Ltd.’s initial public offering. The benchmark German bund yield rose five basis points to 2.59 percent, and the yen declined against all 16 of its most-traded counterparts.

Analysts are raising earnings estimates for U.S. companies at the fastest rate since at least 2004, while the MSCI World of equities in 24 developed nations traded at 15 times reported earnings yesterday, the lowest level since March 2009. Today’s gains come as former International Monetary Fund chief economist Kenneth Rogoff warned China’s property market is beginning a “collapse” that will hit the nation’s banking system, and Europe is in “denial” about its lenders.

“Valuations have become attractive and bargain hunting is pushing the market higher,” said Nader Naeimi, a Sydney-based strategist at AMP Capital Investors, which holds $90 billion. “I doubt this is durable. Until we get more clarity on whether we will get a double dip in the economy, markets are likely to remain volatile.”

13:55 Tuesday 6 July, 2010

Dallas Federal Reserve President Richard Fisher said the timing of monetary tightening will depend on conditions in the U.S. economy, which will slow in the latter half of this year, Japan's Nikkei newspaper reported on Tuesday.

Weakness in private consumption may hurt growth and politicians might call for an expansion of monetary easing, although there is little more the Fed can do, Fisher said in an interview with the economic daily.

But Richmond Fed President Jeffrey Lacker was more optimistic, telling the Nikkei that private consumption and corporate capital investment will expand enough to keep the U.S. economy on a sustained recovery later this year and through next year.

13:51 Tuesday 6 July, 2010

China has sharply increased its purchase of Japanese government bonds this year, making net purchases of 541 billion yen ($6.2 billion) during the January-April period when Europe was struggling with its sovereign-debt crisis, according to a report Tuesday. The buying marks a swing from a net sale of 80 billion yen during 2009, Japan's Nikkei business daily reported, adding that "since the start of this year, [the Chinese government's] buying has been frenetic," possibly while unloading euros from its vast foreign-currency holdings. In April, China became the second-biggest foreign buyer of Japanese sovereign debt, after the U.K., the report said.

13:47 Tuesday 6 July, 2010

Asian stocks rebounded, with the regional benchmark rising from the lowest level in almost a month, led by Australian banks and Taiwan technology companies. The yen strengthened and Treasuries gained.

The MSCI Asia Pacific Index rose 0.5 percent to 112.44 at 12:59 p.m. in Tokyo, gaining for a second day. Standard & Poor’s 500 Index futures dropped 0.1 percent. The yen appreciated 0.2 percent to 109.79 per euro. Yields on 10-year Treasuries declined 6 basis points to 2.92 percent.

10:58 Tuesday 6 July, 2010

There could be a 5% correction coming for commodities, warns Michael Langford, proprietary trader at StreamTrading.com. He tells CNBC's Karen Tso, Sri Jegarajah & Martin Soong what is contributing to this pessimistic outlook.

10:54 Tuesday 6 July, 2010

Asian stocks fell, dragging the MSCI Asia Pacific Index lower for the fifth time in six days, as slowing growth in European services and manufacturing added to signs the global economic recovery is faltering.

Canon Inc., an electronics maker that counts Europe as its biggest market, retreated 1.5 percent in Tokyo. BHP Billiton Ltd., Australia’s biggest oil producer, and Inpex Corp., Japan’s largest oil explorer, declined more than 1 percent after crude oil prices dropped on concern demand for energy will decrease.

The MSCI Asia Pacific Index fell 0.8 percent to 110.96 as of 9:51 a.m. in Tokyo. The gauge has fallen 13 percent from its high this year on April 15 on concern Europe’s debt crisis and Chinese steps to curb property prices will hurt global growth.

“The European market was weak, and investors are looking for clues for direction,” said Fumiyuki Nakanishi, a strategist at SMBC Friend Securities Co. in Tokyo.

10:51 Tuesday 6 July, 2010

China’s property market is beginning a “collapse” that will hit the nation’s banking system, said Kenneth Rogoff, the Harvard University professor and former chief economist of the International Monetary Fund.

As China’s economy develops, “especially at the speed it’s growing, it’s going to have bumps,” said Rogoff, speaking in an interview with Bloomberg Television in Hong Kong. He also said that while recoveries across the global economy are “very slow,” the danger of a return to recession isn’t “elevated.”

Rogoff’s concern echoes that of investors, who sent China’s benchmark stock index to its worst loss in more than a year last week. China’s data have been a focus because the nation has led the global recovery from the worst postwar recession.

09:17 Tuesday 6 July, 2010

The Dow Jones Industrial Average is repeating a pattern that appeared just before markets fell during the Great Depression, Daryl Guppy, CEO at Guppytraders.com, told CNBC Monday.

“Those who don’t remember history are doomed to repeat it…there was a head and shoulders pattern that developed before the Depression in 1929, then with the recovery in 1930 we had another head and shoulders pattern that preceded a fall in the market, and in the current Dow situation we see an exact repeat of that environment,” Guppy said.

The Dow retreated 457.33 points, or 4.5 percent last week, to close at 9,686 Friday. Guppy said a Dow fall below 9,800 confirmed the head and shoulders pattern.

The Shanghai Composite is seeing a very rapid collapse, falling below 2,500, which suggests the major fall in the Dow, he added.

07:56 Tuesday 6 July, 2010

Gold is a better investment than currencies or US Treasurys, Patrick Armstrong, managing partner at Armstrong Investment Managers, said. Central banks will monetize the governments' debt and inflation is likely, Armstrong said.

07:51 Tuesday 6 July, 2010

The U.S. stock market will begin the holiday-shortened week in a precarious state, with the third quarter off to a rotten start and the S&P 500 Index perilously close to breaching 1,000 for the first time since September.

"We bulls can't catch a break," said Linda Duessel, equity-market strategist for Federated Investors.

U.S. stock markets are closed Monday for the July 4 holiday.

When they return, investors will be assessing their positions in the wake of stocks' dismal start to the third quarter. Some analysts say the pullback suggests the market is pricing in a double-dip recession.

"Stocks are pricing a major deceleration in economic growth and revising down the outlook for corporate profits," according to Nick Kalivas, an analyst at MF Global.

07:28 Tuesday 6 July, 2010

Japanese Prime Minister Naoto Kan heads a party that has stumbled in the polls, jettisoned the previous leader and may lose its upper-house majority on July 11. His strategy to lure voters: suggest they pay higher taxes.

Half of the 242 seats in the Diet’s upper chamber are up for grabs. The contest will serve as a referendum on the Democratic Party of Japan’s first 10 months in office, a start marred by money scandals and a dispute with the U.S. that led to last month’s departure of Kan’s predecessor, Yukio Hatoyama.

Kan since June 17 has called for a debate on whether to as much as double the 5 percent sales tax, stressing that Japan must confront a debt amounting to $80,000 per person to avoid the kind of fiscal crisis that has made Europe a riskier bet for investors. His suggestion has split the electorate, with about half in favor and half opposed.

Opening the door to a tax increase “is politically astute,” said Naomi Fink, Japan strategist at Bank of Tokyo- Mitsubishi UFJ Ltd. in Tokyo. “It’s a symbol of Japan’s commitment to fiscal responsibility. He’s setting decisive goals, which is a sign of leadership.”

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