IRIS FX TRADING

Dollar leaps to 6-week highs in technical rally

2006-09-08T22:09:00.000-04:00

NEW YORK, Sept 8 (Reuters) - The dollar rose to six-week highs on Friday as dealers aimed at technical targets and positioned for the risk that the Federal Reserve may have to raise interest rates again to keep inflation at bay.
The dollar was set for its biggest weekly gain in two months against a basket of six major currencies. Traders said the dollar's gains were mostly technically driven. The breach of key levels in the euro and sterling sparked a paring of bloated long positions, or bets that both currencies would rise. That added momentum to the dollar's gains. Solid U.S. economic data and warnings on inflation from Federal Reserve officials this week have also lent the dollar some support. Although analysts expect the Federal Reserve to keep interest rates on hold this month, dollar bulls have not given up hope for more rate rises in coming months. "It's mainly been technically driven, with the euro taking out some key support levels at $1.2750 and below $1.27 today," said Nick Bennenbroek, currency strategist at Brown Brothers Harriman in New York. "And on the margin we've had some data come in on the firm side this week, supporting the dollar." The euro was last down 0.5 percent on the day and down 1.3 percent on the week at $1.2665, after triggering large stop-loss orders below $1.2690 and touching a six-week low of $1.2651. Sterling slipped 0.6 percent to $1.8650, after earlier plumbing six-week lows of $1.8628. Against the Swiss franc, the dollar was up 0.4 percent at 1.2472 francs. The dollar index is up 1.25 percent on the week.The dollar stood at 116.90 yen, up 0.4 percent on the day. One of the biggest losers this week has been the New Zealand dollar, which has slumped almost 3 percent and extended losses on Friday after the country's finance minister voiced concern over the currency's recent rise. The kiwi dollar was down 1.3 percent at $0.6370.
G7 AWAITED
Speakers from the Fed this week have continued to sound warnings on higher inflation even though economic growth is slowing, keeping the risk alive the Fed could be forced to tighten policy later this year and thereby support the dollar. "At the margins, some of the recent comments from Fed officials paint a different picture from what is priced into the market," said Sophia Drossos, currency strategist with Morgan Stanley. "Some of the doves on the FOMC are starting to sound circumspect about upside inflation risks," she said, referring to the policy-setting Federal Open Market Committee. The spotlight next week is expected to shift to a meeting of the Group of Seven industrial nations. Investors will be looking to see if finance ministers keep up pressure on countries enjoying big trade surpluses, notably China, to allow more currency appreciation. The dollar fell sharply after the last G7 meeting in April, when the group of rich nations urged more currency flexibility to help ease global imbalances -- a call that was interpreted as giving a green light to a weaker dollar. But it was a fleeting move. The dollar has since pared about half its losses against a group of major currencies. Against the yen, the dollar has rebounded completely.

G-7 Says Economy ' Strong,' Urges Asian Currency Gains

2006-04-23T14:45:00.000-04:00

April 22 (Bloomberg) -- The Group of Seven said the world economy is in "strong" shape and called on some Asian nations, especially China, to allow their currencies to appreciate.Finance ministers and central bankers from the group said prospects for continued economic expansion are favorable, even as oil prices climb to a record. Stronger Asian currencies and less reliance on exports for growth can help reduce imbalances that jeopardize that encouraging outlook, the officials said. "The global economy is in the best shape it's been in a long, long time with strong growth, high productivity, inflation well-contained," U.S. Treasury Secretary John Snow said at a press conference after the G-7 meeting in Washington yesterday.

The world economy is on its surest footing since the start of the decade as growth in Japan and the euro region picks up, while the U.S. probably enjoyed the fastest quarterly expansion in more than two years. In a separate statement, the G-7 said it's "critical" China let the yuan advance and some oil producing nations allow more fluctuation in their currencies. "In emerging Asia, particularly China, greater flexibility in exchange rates is critical to allow necessary appreciations, as is strengthening domestic demand, easing reliance on export- led growth strategies, and actions to strengthen financial sectors," the statement said.

New Language

The language is a departure from the words the G-7 usually uses to address China's exchange rate. Past communiqués have referred only to the need for more flexibility without saying whether the yuan should strengthen or weaken.Officials bolstered the language because they felt China's efforts to increase the flexibility of its currency have been too slow, a Japanese finance ministry official told reporters in Washington late yesterday on the condition of anonymity."They have clearly started to apply more pressure," Lara Rhame, a currency strategist at Credit Suisse in New York, said in an interview. "They have singled out China and the rest of the emerging market economies." Asian currencies will probably rally when markets open on April 24, Rhame said. French Finance Minister Thierry Breton said Japan may let the yen advance as its economy rebounds and deflation ends. "It's a positive story for Asian currencies, especially with these kind of statements," said Irene Cheung, an economist and strategist at ABN Amro Holding NV in Singapore. "If we see the yuan and the Korean won head higher on Monday then that will set the mood and most other Asian currencies will move higher too."

"Not the Message"

The G-7 remarks on exchange rates aren't an invitation to sell the dollar against currencies outside Asia, said European Central Bank President Jean Claude Trichet. "This is certainly not the message," Trichet told reporters after attending the meeting. "It would be a mistake" to interpret it as a de-facto call for a stronger euro, he said. The euro has climbed 4.2 percent versus the dollar this year.The G-7 gathering followed a meeting between President George W. Bush and Chinese President Hu Jintao at the White House that did little to narrow differences over China's managed exchange-rate system. The yuan has gained 1.2 percent since a revaluation in July.The U.S. trade deficit with China widened to a record $202 billion last year, a quarter of the current account shortfall, which reached an unprecedented $805 billion. The current account is a measure of trade, services, tourism and investments. Snow is under pressure from the U.S. Congress to brand China a currency manipulator for keeping the yuan artificially low to boost exports.

Oil Prices

The International Monetary Fund this week raised its forecast for global economic growth in 2006 to 4.9 percent from a September prediction of 4.3 percent. At the same time, the G-7 said it's worried about rising oil prices, protectionism and imbalances reflected by the U.S. current account deficit and China's surplus. The G-7 represents almost two-thirds of the world economy, comprising the U.S., Japan, Germany, the U.K., France, Italy and Canada. Snow, European Central Bank President Jean-Claude Trichet and Japanese Finance Minister Sadakazu Tanigaki are among officials who signed off on the statement.With oil jumping to an all-time high of $75.35 a barrel on the New York Mercantile Exchange yesterday, energy prices remain "a risk" to the economic outlook, the G-7 statement said. Carl Weinberg, chief economist at High Frequency Economics in Valhalla, New York, calculates each $10 increase in the price of oil knocks 0.5 percentage point off growth in the G-7. To correct imbalances, the U.S. must reduce its budget deficit, Japan and Europe must boost domestic demand and Asian nations must loosen the tethers on their currencies, the G-7 statement said, repeating language from previous meetings. At least part of that prescription is starting to come true. Japan's economy will expand 2.8 percent in 2006, the most since 2000, and the euro area's gross domestic product will increase 2 percent this year, according to this week's IMF growth forecasts.The separate statement on imbalances also called on oil- producing countries to accelerate investment in production capacity and to diversify their economies, and for other "current-account surplus countries" to boost domestic consumption and investment.Following their formal meeting, the G-7 held a working dinner with China, Saudi Arabia, Russia and the United Arab Emirates. China is the world's second-largest consumer of oil after the U.S., and Saudi Arabia, Russia and the UAE are the world's biggest, second-largest and sixth-largest oil exporters.

Treasury benchmark may see 5.50 percent

2006-04-16T05:20:00.000-04:00

NEW YORK (Reuters) - The brisk sell-off in bonds may take the yield on benchmark U.S. Treasury notes to as high as 5.5 percent this quarter, strategists said, particularly now that a key psychological level has been breached. The 10-year yield moved decisively above 5 percent on Thursday to its highest level in nearly four years and will probably continue to rise on the prospects for economic growth, interest-rate hikes and elevated commodities prices. Futures markets show the Federal Reserve and other global central banks will continue to raise rates, and commodities prices could feed into core inflation later in the year -- helping drive up sovereign-debt yields globally, bond strategists said.
Against that backdrop, investors may demand higher rates on U.S. bonds in order to compete with returns they hope for from stock and commodities funds, some said. Equities strategists polled by Reuters see U.S. benchmark stock indexes gaining almost 10 percent this year. The Standard & Poor's 500 Index gained 3.7 percent in the first quarter. "People are looking for extra return out there," said Bill Kohli, managing director for global specialist core fixed income with Putnam Investments in Boston, adding that the 10-year Treasury note's rise to around 5.05 percent reflects that. "People will be re-evaluating what an appropriate real rate is, given the equity (market) returns we have had in the first quarter and that commodity prices are up," Kohli said. If the 10-year note's yield, which moves inversely to price, were to rise to between 5.25 percent and 5.5 percent by the end of June, Kohli said "that wouldn't surprise me." As investors continue to shift into competing asset classes that may offer higher returns -- including speculative-grade or "junk" U.S. corporate bonds, stocks and commodities -- outflows from U.S. government debt may weigh on Treasuries prices and send yields higher.
"The 10-year above 5 percent means that the economy has been strong and people are betting it will continue to be" for the rest of 2006, said Brian Reynolds, chief market strategist at M.S. Howells, an institutional brokerage firm in Scottsdale, Arizona. "What we have seen this year is people selling Treasuries to buy corporate bonds, because the economy has been great and (companies') profits have been OK and are expected to be for a long time -- and you buy corporate bonds for the additional spreads," Reynolds said. The Federal Reserve may react to the first signs of the filtering of high commodities prices into core inflation gauges by raising interest rates more than the market currently expects, lifting bond yields, warns Jack Malvey, chief global fixed-income strategist with Lehman Brothers in New York. "The bond markets may be in for more central bank medication," Malvey said, adding that it looks increasingly likely the federal funds target rate could rise to 5.5 percent from the current 4.75 percent, and perhaps higher. Over the next three or four months, the 10-year note's yield could rise to between 5.35 percent and 5.50 percent,he said. "The big picture is that the world economy is in vigorous form, commodity prices will pass through to inflation over the balance of this year, and central banks will be on the hawkish side," Malvey said . There is no guarantee, of course, that a breach of 5 percent means a move to 5.5 percent. The 10-year yield's most recent surge above 5 percent came in March 2002. The yield topped out at 5.47 percent that month before slipping back to as low as 4.19 percent in November of that year. And there are some who expect the world's biggest economy to slow sooner rather than later and therefore don't see the benchmark note's yield moving much higher. "On a longer-term basis, I don't see a fundamental reason for it to go above 5 percent," said Keith Hembre, chief economist with FAF Advisors in Minneapolis. "There is the view that global growth would drive longer yields higher, but decelerating domestic activity in the second quarter and third quarter, and the cumulative effect from the Fed hikes," in slowing economic activity, should keep the 10-year yield below 5 percent later this year, Hembre said.

Dollar's Rally Stalls; Traders Seek Signs of Economic Strength

2006-03-22T09:23:00.000-05:00

March 22 (Bloomberg) -- The dollar's two-day rally against the yen and euro stalled as traders said they need more evidence the Federal Reserve will raise interest rates twice more before pushing the U.S. currency higher. The dollar gained to start the week, following its biggest weekly loss in two months, as investors rebuilt expectations U.S. rates will rise more than in Europe and Japan. Traders must wait for tomorrow's reports on jobless claims and home sales for more evidence the U.S. economy is accelerating. "The dollar's upside momentum has slowed,'' said Marc Chandler, the global head of currency strategy at Brown Brothers Harriman & Co. in New York. The dollar fell to 116.74 yen at 8:36 a.m. in New York from 117.27 yesterday. It traded at $1.2090 per euro from $1.2095 late yesterday. The U.S. currency will rally to at least $1.15 by the third quarter, Brown Brothers forecasts. The U.S. currency initially declined today after Fed Chairman Ben S. Bernanke said in a letter yesterday to Representative Brad Sherman "the possibility of a future disruptive correction of the U.S. trade deficit cannot be ruled out.'' A widening U.S. trade deficit sent the dollar lower against the euro and yen from 2002 to 2004. Traders expect the Fed to raise rates at least twice more this year after 14 straight increases since mid-2004 to 4.5 percent. U.S. jobless claims probably remained above 300,000 for a third straight week, while sales of existing homes likely slowed about 0.9 percent to a 6.5 million annual rate, according to the median forecasts in surveys by Bloomberg News.

Bank of Japan Governor Toshihiko Fukui said today the bank hasn't decided when to lift rates from zero percent, where they've stood since 2001. The European Central Bank on March 2 raised its benchmark for the second time in three months to 2.5 percent. "The Fed continues to underpin the view that more rate hikes are highly probable, and yield premiums favor the dollar in the short term,'' said Jeremy Stretch, a currency strategist at Rabobank Groep in London. Fukui told a parliamentary committee in Tokyo that the central bank has no "predetermined time frame'' for lifting rates. Japan's central bank on March 9 voted to reduce the amount of money it makes available to lenders, ending a policy of flooding the world's second-largest economy with money to combat deflation.

The euro earlier fell against the dollar and the yen after a report showed industrial orders in the 12 nations sharing the common currency fell more than expected in January. Orders dropped 5.9 percent from the previous month, the biggest decline since May 1997, a European Union report showed. Economists surveyed by Bloomberg had expected a 0.2 percent decline. The prospect of higher rates has sent the euro up 1.9 percent versus the dollar this year. "It was a bad number and traders don't have anything else important to trade off today,'' said Armin Mekelburg, a currency strategist at HVB Group in Munich. "There has been some exaggerated optimism on how high ECB rates would go.'' The dollar has rebounded from its biggest weekly loss in two months as traders renewed bets on how high the Fed is likely to push rates. Interest-rate futures show traders have fully priced in a rate increase to 4.75 percent at the Fed's meeting March 28. The chance of another increase to 5 percent in May rose to about 90 percent from 73 percent March 17.

"We're back to 5 percent expectations and the dollar is recovering from its sharp slide of last week,'' said John Kyriakopoulos, a currency strategist at National Australia Bank Ltd. in Sydney. "The dollar has a little further to go.'' The U.S. currency yesterday had the biggest gain in two weeks versus the euro and the yen after a key gauge of inflation rose more than expected. Prices paid to factories and other producers last month, excluding energy and food, rose 0.3 percent, compared with the 0.1 percent forecast in a Bloomberg economist survey. Gains for the dollar versus the euro may be limited after ECB policy maker Axel Weber said today he's concerned about inflation in the euro-region. The Frankfurt-based central bank's March 2 forecast for inflation to hold above 2 percent this year and next is "a certain cause for concern,'' he said in an interview in Frankfurt yesterday. Investors expect the ECB to raise its rate to as high as 3.25 percent by the year-end, futures trading shows.

Chinese banks to trade FX on Reuters exchange

2006-02-21T01:22:00.000-05:00

Financial Times London 2/20...China’s four largest banks yesterday signed up to trade foreign exchange via Reuters’ electronic trading system. The move gives Bank of China, Bank of Communications, China Construction Bank and the Industrial and Commercial Bank of China access to about 40 spot currency pairs traded the system. Some of the banks had already signed up with EBS, Reuters’ main rival in the inter-dealer market. Until recently, onshore Chinese banks could only trade non-renminbi currency pairs via the China Foreign Exchange Trade System, a dealer-to-bank platform that boasts just ten market-makers and far less liquidity than Reuters’ global system. The move coincides with increased sabre-rattling on Capitol Hill about China’s foreign exchange regime, with John Snow, the US Treasury secretary, hinting earlier this month that his department was likely to formally accuse China of being a “currency manipulator” in its next report on trade and exchange rates. China has allowed the renminbi to appreciate by just 0.8 per cent since a 2.1 per cent revaluation of the currency in July 2005. As such, the recent moves by Chinese banks to enter the wider FX markets will be seen by some as another small sign that China is slowly liberalising its foreign exchange regime and preparing its domestic banks for a less regulated trading environment. “This is another indication the market is opening up,” said one currency analyst. “China can say ‘stop moaning, we are developing our system at our own pace’.” However, simultaneously, there are signs that Chinese banks and exporters are still woefully unprepared for the advent of a freer-floating currency that would move by more than a fraction of a percentage point a day. Yesterday only five deals were completed on China’s onshore forwards market, according to Tony Norfield, global head of FX strategy at ABN Amro, and even that is more activity than is seen on many days. “Five is a relatively high number – on some days there are only one or two deals done. That is fairly depressing,” said Mr Norfield. In theory there should be literally thousands of Chinese exporters keen to hedge their forward foreign currency exposure, particularly with the offshore non-deliverable forwards market pricing-in a 12-month renminbi rate of Rmb7.6955, an effective appreciation of 4.4 per cent from yesterday’s closing price of Rmb8.0475.

Companies Keep Hiring as Demand Grows: U.S. Economy Preview

2006-01-01T22:35:00.000-05:00

Jan. 1 (Bloomberg) -- U.S. employers added another 200,000 jobs last month as companies remained optimistic that the new year will bring more corporate investment and solid economic growth, according to a survey of economists before a government report this week. The estimate of new jobs created in December, the median forecast in a Bloomberg News survey of economists, follows an increase of 215,000 jobs in November. The Jan. 6 report from the Labor Department will probably also show the unemployment rate held at 5 percent, in line with the average over the last decade, according to the survey. Business investment in new equipment and operations will probably play a larger role in driving economic growth next year and compensate for any weakening in consumer spending, economists said. A gauge of manufacturing probably remained at a level showing strength in production and orders. "Corporations in America have made huge profits, but I think they've been hesitant to spend those profits'' so far, Timothy Kane, a research fellow at the Heritage Foundation in Washington, said in an interview. "Most of us think that the time has come that we will probably see a lot of expansion this year, a lot of hiring.'' Employers probably added 2 million jobs last year. The U.S. created 2.194 million jobs in 2004, the most since 1999, according to Labor Department statistics. The Institute for Supply Management is forecast to report on Jan. 3 a reading of 57.4 in its December index of manufacturing. That compares with 58.1 in November and is higher than the 55.7 average for all of 2005.

Growth Impulses
"The perspectives for the coming year can be described as solid,'' Thomas Amend, an economist at HSBC Trinkaus & Burkhardt KGAA in Dusseldorf, Germany, said in an interview last week. "Apart from consumption, which is one of the most important growth drivers in the U.S., we are also getting increasingly positive growth impulses from the investment side.'' Some factories are running out of spare capacity in their bid to meet demand, something Federal Reserve policy makers have indicated could push up inflation. On Jan. 3, investors may also get a sense of how much more Fed policy makers will raise their benchmark interest rate after 13 increases in a row. The Fed will release minutes of its Dec. 13 policy meeting at which they decided to stop saying there was "accommodation'' in interest rate policy. Central bankers also said "possible increases in resource utilization as well as elevated energy prices have the potential to add to inflation pressures.''

Capacity Use
The amount of capacity in use at the nation's factories was 79.4 percent in November, matching October as the highest since September 2000. Bottlenecks typically develop and threaten to boost inflation when capacity utilization is around 81 percent, according to Joseph LaVorgna, chief U.S. fixed income economist at Deutsche Bank Securities in New York. With higher interest rates and a slowdown in the housing market making it less likely consumer spending will accelerate this year, the strength of the economy will depend more on how much companies upgrade equipment and plants. Less home price appreciation will limit refinancing, which has been a source of cash for consumer spending, economists said. "Chances are good that housing activity and prices will level out in the period ahead,'' economists at Citigroup said in a note to clients. "The chief by-product of such a development would be consumer spending growth more in line with, or somewhat below, disposable income growth.'' So far, consumer spending has remained robust. The week ended Dec. 24 was the best so far of the holiday shopping season with comparable sales rising 2.8 percent from the previous week, according to the International Council of Shopping Centers. The group reaffirmed its forecast of a gain of 3 percent to 3.5 percent for the season.

Retail Sales
The ICSC is forecasting the second-biggest sales gain for retailers since 1999. Sales rose 5.4 percent in 1999 and 4 percent in 2003. Including Internet purchases, spending has been even stronger. Sales from Oct. 29 to Dec. 23 rose to $30.1 billion, according to a survey conducted by research firm Nielsen/NetRatings, Goldman Sachs & Co. and Harris Interactive. Computer hardware and related equipment led the increase, rising 126 percent to $4.82 billion, followed by consumer electronics, up 109 percent to $4.79 billion. Shoppers were drawn by free shipping offers from retailers including Amazon.com Inc. and L.L. Bean Inc. Amazon.com, the world's biggest online retailer, said Dec. 26 holiday sales worldwide set a record this year, spurred by demand for iPod music players, video games and jewelry.
The Institute for Supply Management is forecast to report on Jan. 5 that its index of non-manufacturing business, which includes retailers, construction firms and other service providers, rose to 59 in December from 58.5. Readings higher than 50 indicate expansion. "We see very strong demand now,'' Stephen Bollenbach, chief executive officer of Hilton Hotels Corp., said in an interview last week from Beverly Hills, California. "It's really good times for our business. From a hotel perspective it's boom times.''

Dollar Rises Against Euro and Yen; Job Losses Are a Quarter of Forecasts

2005-10-08T13:54:00.000-04:00

Oct. 7 (Bloomberg) -- The dollar rose for the first day in three after the U.S. economy's job losses last month were less than a quarter of the number forecast by economists. Today's gain reduced the dollar's loss against the euro for the week, its first weekly decline in five. Interest rate futures indicate traders expect the Federal Reserve will raise its benchmark three more times to 4.5 percent by January. "It's dollar positive because you still have a much more resilient U.S. economy than had been expected,'' said David Durrant, investment strategist at Bank Julius Baer & Co. in New York, which manages about $30 billion. "The Fed's path hasn't changed -- this number tells us that after the next rate hike we should be looking for more.'' Against the euro, the dollar traded at $1.2129 at 5 p.m. in New York, from $1.2178 late yesterday, according to electronic currency-trading system EBS. The dollar rose to 113.82 yen from 113.30. For the week the dollar dropped 0.9 percent against the euro and rose 0.3 percent against the yen. The Labor Department said employers cut 35,000 workers from their payrolls in September, and August's job gains were revised up to 211,000. Economists expected a loss of 150,000 jobs last month, based on the median of 73 estimates in a Bloomberg News survey.

August Impact
The dollar's gains were driven more by the revision to August, and the September data may present an incomplete picture of the storms' impact, said Russell LaScala, a currency trader in New York at Deutsche Bank AG. "The only thing I was trading off of was the revisions,'' LaScala said. "It's difficult to put a lot of capital behind this data'' from September, he said. The rally may also be limited by lighter-than-usual trading before the holiday weekend. The Bond Market Association recommended bond markets close early today, at 2 p.m. New York time, and remain shut Oct. 10 in observance of the Columbus Day holiday. Stock markets will maintain normal hours. The U.S. currency rose 12 percent against the euro and 11 percent versus the yen this year as the Fed has raised its benchmark rate six times, to 3.75 percent. The European Central Bank has kept its rate at 2 percent for two years, while the Bank of Japan has maintained rates near zero since 2001. The yield on the December federal funds futures at the Chicago Board of Trade held at 4.12 percent, indicating traders see a 78 percent chance the Fed will lift its rate to 4.25 percent by year-end after boosting the rate to 4 percent Nov. 1.

ECB Bolsters Euro
The 12-nation European currency this week has been bolstered by a more aggressive stand by the ECB on rates and inflation, rising yesterday by the most since January 2004 versus the dollar after ECB President Jean-Claude Trichet said the bank may increase interest rates "at any time'' to prevent inflation from accelerating. "A lot of people will be picking up euros at these levels,'' said Mitul Kotecha, head of currency strategy in London at Calyon, the securities unit of Credit Agricole SA. "After the hawkish comments from Trichet, people may think this is the bottom of a range'' for the euro, and "it's a good level to get in.'' The Fed last month said the U.S. economy faces only a "near-term'' setback from Hurricane Katrina, the nation's most costly natural disaster, and pledged to stick to its policy of raising rates at a "measured'' pace.

'Supportive of Dollar'
"Expectations of further rate hikes in the U.S. over the rest of the year are very supportive of the U.S. dollar,'' said John Kyriakopoulos, a currency strategist at National Australia Bank Ltd. in Sydney. "The market has already moved to price in the first 25 basis points rate hike in November, but has not yet fully priced in the second in December.'' The dollar may rise to $1.19 per euro in the coming three months, he said. The dollar has risen or fallen an average of 1.1 cents per euro on the day of the monthly jobs report in the past 12 months, according to data compiled by Bloomberg. St. Louis Fed Bank President William Poole on Oct. 4 described as "reasonable'' futures-market predictions that rates will rise another half-percentage point this year. UBS AG, the world's second-biggest currency trader, yesterday raised its forecast for the dollar versus the euro and the yen as it expects the Fed to continue to express concern about inflation. The bank expects the dollar to trade at $1.22 against the euro in one month and $1.24 in three months. UBS forecast it will trade at 112 yen in one month and 108 yen in three months.

Dollar Advances for Third Straight Quarter Against Euro, Yen

2005-10-01T04:05:00.000-04:00

Oct. 1 (Bloomberg) -- The dollar capped its third straight quarterly gain against the euro and the yen, the longest winning streak since 2001, as the Federal Reserve maintained its pledge to raise interest rates at a "measured'' pace. The U.S. currency rose 2.3 percent against the yen and 0.7 percent versus the euro in the past three months as the Fed lifted its benchmark rate twice, to 3.75 percent. The European Central Bank has kept its rate at 2 percent for two years, while the Bank of Japan has maintained rates near zero since 2001. "People are willing to hold dollars,'' said Gerry Celaya, chief strategist at Redtower Research, a market research firm in Montrose, Scotland. "People are coming around to the view that the Fed is going to keep raising rates". The dollar strengthened 1 percent this week to 113.50 yen, its third straight weekly gain, at 5 p.m. yesterday in New York, according to currency dealing system EBS. The U.S. currency gained 0.1 percent to $1.2026 per euro. Celaya said the dollar will rally to $1.13 per euro and 125 yen by year-end. Redtower was the most accurate forecaster of foreign-exchange rates in the second quarter, according to a Bloomberg survey. The dollar was also bolstered as the yield advantage of Treasury notes over European government debt widened last quarter to the most in more than six years. The Fed last month said the U.S. economy faces only a "near-term'' setback from Hurricane Katrina, the nation's most costly natural disaster, and pledged to stick to its policy of raising rates at a "measured'' pace.

Yield Advantage
"The Fed has given all impressions that they intend to keep raising rates,'' said Tim Mazanec, senior currency strategist in Boston at Investors Bank & Trust Co. "That has spurred interest in the dollar.'' The yield advantage of 10-year Treasuries over German government bonds with a similar maturity is 1.19 percentage points, near the widest since July 1999. Versus Japanese government bonds, the spread is 2.84 percentage points. The gap with Japan has averaged 2.87 percentage points this year and reached as much as 3.27 percentage points on March 28.
"Japanese investors are buying the dollar to purchase overseas assets, such as Treasuries,'' said Luke Waddington, head of interbank currency sales Royal Bank of Scotland Plc in Tokyo. Japanese investment abroad is being led by a surge in purchases of foreign bonds. Japan's investors, including the central bank, held $683 billion of Treasuries in July, more than any other country, and they were net buyers of foreign bonds for all but two weeks this quarter, according to U.S. Treasury Department figures.

Dollar Story
The Fed's six quarter-point rate increases in 2005 helped spur a 10 percent gain in the dollar versus the yen and a 12 percent rally against the euro this year. "It really is a U.S. dollar story,'' said Clifford Bennett, chief strategist in Sydney at FxMax. The Fed will lift rates to 4 percent at its meeting on Nov. 1, he said. The National Association of Purchasing Management-Chicago said yesterday that its Business Barometer, which is based on a survey of executives in the region, rose to 60.5 this month from 49.2 in August. A number higher than 50 signals growth.
A separate survey showed U.S. consumer confidence fell by the most in 15 years. The University of Michigan's final index for September fell to 76.9 from 89.1 a month earlier, the same as was first reported on Sept. 16. The yen may be supported after Bank of Japan Governor Toshihiko Fukui said this week the central bank might stop pumping money into the economy as soon as April and forecast inflation may return after a seven-year absence. Fukui's remarks at a press conference in Osaka were the first time a BOJ official has indicated a timetable for ending its policy of holding interest rates near zero. "The yen is relatively undervalued,'' said Ashley Davies, a currency strategist in Singapore at UBS AG. Fukui "signaled the BOJ is surprisingly flexible in when it changes its policy.''
The yen may gain to 109 against the dollar in the next month, Davies said. Investors should increase bets the yen will gain versus the euro on speculation the BOJ will change its policy, Lehman Brothers Holdings Inc. said. Japan's currency has fallen about 2 percent against the euro in the past three months. "The yen looks too cheap in a world where the BOJ may be removing its zero-rate policy in the months ahead,'' wrote James McCormick, Lehman's head of global currency research in London, in a report sent to clients this week. "Yen fundamentals are increasingly too strong, and the currency too weak, to justify further declines.''

Dollar Falls Against Yen; BOJ's Suda Says Bank Closer to Shift in Policy

2005-09-28T21:37:00.000-04:00

Sept. 28 (Bloomberg) -- The dollar fell against the yen after Bank of Japan policy maker Miyako Suda said the central bank is "getting closer'' to reducing the amount of money it pumps into the economy. Suda, who spoke to executives in Koichi City in southern Japan, is the latest Japanese central banker to signal an end to the BOJ's practice of holding interest rates near zero to combat deflation. The dollar also weakened versus the euro after failing to remain stronger than $1.20 for a second straight day. "Our view is that the yen is going to strengthen,'' said Eric Darwell, a currency strategist in New York at Citigroup Inc., the world's biggest bank, "The BOJ is moving away from easing and toward using rates to influence policy. This is another step in that direction.'' Against the dollar, the yen strengthened to 113.11 at 5 p.m. in New York from 113.30 late yesterday, according to electronic foreign-exchange dealing system EBS. Japan's currency fell 1 percent yesterday, the most since June 10. The dollar weakened to $1.2035 per euro from $1.2013. Darwell said he expects the yen to rise to 108 per dollar by year-end. The dollar briefly breached $1.20 per euro in morning trading in New York, touching $1.1982, before weakening. Analysts including Dennis Gartman say $1.20 may be a barrier to the dollar advancing. It last closed stronger than $1.20 in July. "We might wish to call this `big figure fatigue,' for the dollar is holding just above the materially and very psychologically important 1.20 level,'' wrote Gartman, an economist in Suffolk, Virginia, and editor of the Gartman Letter, in a report sent to clients today. We expect "that support for the euro to be broken.''

Japan's Bonds, Stocks
Japanese bonds fell and stocks climbed, led by banks, after Suda's comments. The Nikkei 225 Stock Average and the Topix index rose to the highest in more than four years. Foreigners were net buyers of Japanese equities for a 14th straight week last week. The BOJ has kept rates near zero for more than four years to overcome deflation, which has eroded corporate profits and discouraged consumers from spending. Suda has been a member of the central bank's rate-setting board since 2001. "Suda's comments point to a shift in thinking over policy by the Bank of Japan,'' said Benedikt Germanier, a currency strategist in Zurich at UBS AG, the second-largest foreign- exchange trading bank. "This is going to trigger yen buying, especially as the yen had been oversold against the dollar.'' Toshikatsu Fukuma and Atsushi Mizuno, who also vote on rates, said at policy meetings in the past two months that the bank should cut the amount it makes available to lenders from as much as 35 trillion yen, according to minutes released Sept. 13.
Japan's currency also advanced after it approached a technical indicator that may signal a reversal of direction versus the dollar. The yen has dropped almost 10 percent this year against the U.S. currency, and reached 113.51 per dollar yesterday, the weakest since July. "We might be due for a pause near-term in the dollar's gains,'' said John Horner, a currency strategist in Sydney at Deutsche Bank AG, the world's largest currency trader, according to Euromoney magazine. The dollar's 14-day relative strength index against the yen yesterday rose to 66.1, nearing a level that signals gains may be excessive. The euro's RSI against the dollar dropped to 35.25. A level above 70 or below 30 may herald a change in direction. The index measures the momentum of a currency's movements. Reports from Japan in the next week may show the world's second-largest economy is picking up. The Bank of Japan's Tankan quarterly index of business confidence probably rose to 20 points in September from 18 points in June, according to the median of 28 forecasts in a Bloomberg News survey before a report on Oct. 3. Japan's industrial production likely increased 1.8 percent in August, compared with a 1.2 percent decline in the previous month, according to the median forecast of economists surveyed by Bloomberg News. The report is due for release on Sept. 30.

U.S. Durable Goods
Losses in the dollar may be limited after a U.S. report showed durable-goods orders increased more than economists forecast. Three Fed policy makers this week signaled growth is strong enough to allow further rate increases. Kansas City Fed Bank President Thomas Hoenig said late yesterday the economy is in "reasonably good shape.'' "It's difficult to argue against a stronger dollar,'' said Gavin Friend, a currency strategist at Commerzbank AG in London. "The Fed has clearly telegraphed it will continue raising the rate through the year.'' Orders for durable goods rose 3.3 percent last month, from a revised 5.3 percent drop the month before. Economists expected an increase of 0.7 percent, according to the median of 64 forecasts in a Bloomberg News survey. The dollar has advanced almost 13 percent against the euro this year as the Federal Reserve raises interest rates at a "measured'' pace and the European Central Bank doesn't budge. Fed policy makers on Sept. 20 lifted the benchmark interest- rate target for the 11th time in a row, to 3.75 percent. The European Central Bank has kept its benchmark rate at 2 percent since 2003.

Dollar up; Traders focus on higher rate outlook

2005-09-27T20:33:00.000-04:00

NEW YORK, Sept 27 (Reuters) - The dollar rallied on Tuesday, hitting 2-month highs against the euro and yen, as traders focused on remarks from Federal Reserve officials that point to more interest rate increases. Analysts said one catalyst for dollar gains during the session were remarks by San Francisco Fed President Janet Yellen, who said the Federal Reserve "must deliver" on its commitment to price stability, adding that an unacceptable rise in inflation is not an option. "We are getting a consistent view from the Fed now that they are somewhat worried about the risk of a higher inflation rate. That is going to cause more rate hikes to come and higher yields will help the dollar," said Tim Mazanec, senior currency strategist with Investors Bank & Trust in Boston. Yellen's remarks overshadowed a report showing a steep fall in U.S. consumer confidence, and a speech by Federal Reserve Chairman Alan Greenspan on "economic flexibility" delivered by satellite to an economics conference in Chicago. Many traders had hoped he would bolster expectations of higher interest rates, but he failed to deliver. Instead, the dollar eased back from these 2-month highs in afternoon trading. The euro was down about 0.5 percent from late Monday at $1.2013, according to Reuters data. It had gone as low as $1.1979 Against the Japanese yen, the dollar was trading up about 1 percent at 113.27 yen. It had climbed as high as 113.50 yen. Higher U.S. interest rates support the dollar because they increase the allure of dollar-denominated deposits to foreign investors. The euro had already slipped moderately even after a weak U.S. consumer confidence report although investors were largely waiting for Yellen and Greenspan to speak. The Conference Board's September Consumer Confidence reading was 86.6, well below analysts' forecasts of 95.0, reflecting a blow to consumer confidence from hurricane damage on the U.S. Gulf Coast and spikes in energy prices. A separate report showed August U.S. new home sales were at an annualized rate of 1.237 million, below forecasts of 1.340 million. But Todd Elmer, currency strategist with Citigroup in New York, said "New home sales were not a big number for the currency market."

Later in the day investors were buoyed by Yellen but disappointed by Greenspan, analysts said. Greenspan said that asset prices "invariably" fall after long periods of big risk-taking in markets, and a flexible economy is better able to withstand the inevitable blow. He added that it was "simply not realistic" to rely on policy-makers to spot and deal with speculative bubbles. "He doesn't say anything very specific about current monetary policy," said Steven Englander, Chief North American Foreign Exchange Strategist at Barclay's Capital in New York. "In some ways for FX markets, which have got used to Fed speakers being relatively hawkish, this may be a little disappointing (for the dollar)." Against the Swiss franc, the dollar was up 0.5 percent to 1.2957 francs. Sterling was down 0.7 percent to $1.7667. The Fed raised overnight rates last week for an 11th straight time to 3.75 percent. Although the central bank said Hurricane Katrina's damaging blow to the economy would not pose a "persistent threat," it repeated that more "measured" monetary tightening was needed. Analysts said U.S. companies' repatriation of profits from Europe before the end of the July-September quarter was also helping the dollar this week. They get a much-reduced tax rate for repatriating overseas profits this year. The dollar was also supported by the growing interest rate differential between U.S. Treasuries and German Bunds, with the 10-year yield spread testing six-year highs.

Oil, Gasoline Fall After Hurricane Rita Spares Refineries

2005-09-26T14:59:00.000-04:00

Sept. 26 (Bloomberg) -- Crude oil prices plunged to a two- week low and gasoline declined after Hurricane Rita struck only a glancing blow to Houston's oil hub. Most of the 15 refineries closed as Rita approached are beginning to start up. Rita hit the Texas-Louisiana border on Sept. 24 with winds of 120 mph after veering away from Houston and Galveston, home to 12 percent of the U.S. refining capacity. Exxon Mobil Corp. said yesterday it began delivering gasoline from its Baytown refinery, the U.S.'s largest. "The refining sector dodged a bullet,'' said David Pursell, a partner at Pickering Energy Partners in Houston. "It looks like refineries are off for weeks, not months.'' Crude oil for November delivery fell 69 cents, or 1.1 percent, to $63.50 a barrel at 10:55 a.m. on the New York Mercantile Exchange. In earlier trading prices touched $62.65, the lowest since hitting $62.55 on Sept. 12. Futures have fallen 10 percent since touching a record $70.85 on Aug. 30, the day after Hurricane Katrina made landfall. Prices are 28 percent higher than a year ago. Gasoline for October delivery fell 9.06 cents, or 4.3 percent, to $1.995 a gallon on the Nymex. Prices touched $2.92 a gallon on Aug. 31, the highest since trading began in 1984. Futures are 48 percent higher than a year ago. The Nymex and London's International Petroleum Exchange offered weekend trading yesterday because of Rita. Both exchanges incorporated yesterday's trades as part of today's session. Oil production in the Gulf, which accounts for about 30 percent of U.S. output, was completely halted because of Rita and Katrina, the U.S. Minerals Management Service said yesterday.

Chevron Corp. said its Typhoon platform in the Gulf was "severely'' damaged after Rita. The platform was severed from its mooring and is being secured, the San Ramon, California-based company said in a statement today. "The real issue is offshore production,'' Pursell said. Rita became a Category 5 hurricane on the five-tier Saffir- Simpson scale before coming ashore, with winds of more than 155 mph as it swept over oil and gas production facilities. Damage to oil production platforms such as Chevron's Typhoon shows how strong the winds and waves from Rita were, Pursell said. Texas is home to the biggest concentration of U.S. refineries, accounting for 26 percent of the nation's total capacity. Valero Energy Corp., the nation's biggest refiner, said its Houston and Texas City refineries may restore processing this week. Exxon, the world's largest publicly traded oil company, said with terminals and pipelines reopened, it has resumed delivering gasoline from its Baytown refinery. Initial assessments of the Beaumont refinery and chemical-plant operations don't show any significant damage, Exxon said. About 5 percent of U.S. refining capacity remains closed because of Katrina.Four plants are scheduled to resume output in November or December at the earliest. Gasoline and other fuel pipelines operated by Colonial Pipeline Co. and Explorer Pipeline Co. closed because of Rita. Explorer, which normally ships 10 percent of the Midwest liquid fuel supply, is "up and running at reduced rates'', said Tom Jensen, director of operations. The pipeline resumed operations from Texas to Tulsa today and expects to resume deliveries to St. Louis and Chicago tonight or early tomorrow, Jensen said. Colonial, the world's largest operator of petroleum-product pipelines, said yesterday it resumed operation at its pipelines originating in Houston and Pasadena, Texas, and would be running at 42 percent of capacity. It expected to increase that to 54 percent of capacity today and 72 percent by tomorrow, the Alpharetta, Georgia, company said in a release.

At the pump, the average U.S. retail price yesterday rose 5.2 cents to $2.80 a gallon, according to the AAA motorists' group. It reached a record $3.057 on Sept. 2, the week Katrina hit. Gasoline futures, which serve as wholesale prices, rose 17 percent last week. That increase will translate into higher pump prices, Pursell said. It's too early to know if Rita and Katrina have affected underlying demand for gasoline, he said. "Are people really driving less?'' Pursell said. Other energy companies operating in the Gulf reported little damage from Rita. Kerr-McGee Corp., Southern Union Co. and Cheniere Energy Inc. said assets were little damaged after the storm blew through the area two days ago. Kerr-McGee's major deepwater facilities in the western Gulf had no damage, the Oklahoma City-based company said today in a statement. The Neptune facility is ready to restart as soon as pipelines are ready, the company said. Southern's preliminary assessment of its Trunkline LNG asset in Lake Charles, Louisiana, shows the infrastructure is intact, the Scranton, Pennsylvania-based company said in a statement. The site will remain shut pending further inspection, Southern said. Cheniere, based in Houston, said in a statement it found ``negligible'' impact from Rita at its Sabine Pass site in west Cameron Parish, Louisiana. Brent crude for November settlement fell 39 cents to $62.05 on London's International Petroleum Exchange. It reached a record $68.89 after Katrina hit last month.

NYMEX Oil down over $1 on ACCESS

2005-09-25T20:19:00.000-04:00

NEW YORK, Sept 25 (Reuters) - U.S. crude oil futures were trading more than a dollar lower early on Sunday in a special electronic trading session on the the New York Mercantile Exchange as the oil refinery hub in Houston escaped serious damage by Hurricane Rita.

NYMEX crude for November delivery October delivery slipped to between $63.10 and $63.15 a barrel, traders said, after ending down $2.31 to $64.19 in the regular open-outcry session on Friday. A technical glitch prevented the NYMEX feed from reaching the Reuters wire, the traders said.

In London, November Brent , also open in a special session, traded 94 cents lower at $61.50 a barrel on the International Petroleum Exchange.

G-7 watching interest rate spreads closely

2005-09-24T14:22:00.000-04:00

WASHINGTON, Sept 23 (Reuters) - A senior U.S. Treasury official said on Friday that G7 finance ministers agreed they have to closely monitor current spreads on interest rates to ensure current economic risks were being correctly priced.At a briefing for selected reporters, the official said Group of Seven finance chiefs had noted during a Friday session that rate spreads were currently very narrow and needed to be monitored.The official declined to say whether ministers felt rates were too low to fairly recognize risks and said only that G7 participants had commented on how narrow rate spreads were."They're not saying they're too narrow. They're saying that they are narrow," the official said when asked whether the finance chiefs were worried about rate spreads."Low interest rates invite all sorts of behaviors that create their own set of dynamics that you've got to watch and interest rates that are low for a long time create all sorts of pressure in an economy that you want to watch," and discuss at G7 councils, the official said. In a statement published earlier this week, which is to be delivered on Saturday to the International Monetary Fund, Federal Reserve Vice Chairman Roger Ferguson cautioned that many financial markets might be underpricing risks they face. He said low levels of risk premiums and long-term interest rates suggested a high level of risk-taking and said there was always a possibility that inflation could pick up or that growth might falter due to high oil prices. Indeed, the U.S. Treasury official said some of the G7 members had serious concern about the potential impact on global growth if world oil prices remain at current elevated levels. One G7 participant, who was not named by the official, said three years of $66 a barrel oil could knock global GDP down by as much as 1/2 percent to 1 percent.

The G7 meets again relatively soon -- in London in December -- partly to pay tribute to Federal Reserve Chairman Alan Greenspan, who will retire on Jan. 31 after 18-1/2 years at the helm of the U.S. central bank. The officials said there was a strong desire among G7 members to show their appreciation for Greenspan's long participation in the gatherings. U.S. officials characterized China's latest move to let the yuan float more freely against major currencies other than the dollar -- announced on Friday just ahead of the G7 gathering -- as essentially a technical move rather than a substantial change in policy. They declined to say whether it will help China avoid being named a currency manipulator in a U.S. Treasury report that was scheduled to be issued by Oct. 15 but that will be delayed. At that time, U.S. Treasury Secretary John Snow will be in China, where he is scheduled to attend meetings of the Group of 20 -- a gathering that includes key emerging-market economies as well as those in the G7. China announced a small 2.1 percent revaluation in its yuan currency against the dollar on July 21, a step the G7 praised as a move toward greater currency flexibility in a communique issued on Friday. China had pegged its currency at a low fixed level to the U.S. dollar for a decade prior to that, which U.S. manufacturers said gave its exports an unfair price advantage.
The July action by China, which came in the face of rising U.S. Congressional anger about the flood of cheap Chinese-made products into U.S. markets, came after Treasury warned in a May report that China likely would be named a manipulator unless it did move toward a more flexible currency system.

Euro Falls for Week on China's Yuan Change, German Election

2005-09-24T13:47:00.000-04:00

Sept. 24 (Bloomberg) -- The euro fell for a third week against the dollar, the longest losing streak since May, after China widened the yuan's trading band against the European currency and Germany's election failed to produce a clear winner. China's central bank said yesterday it will allow the yuan to strengthen by as much as 3 percent from a daily fixed rate against the euro, from 1.5 percent previously. It kept the range against the dollar unchanged. "It poses significant risks for the euro going forward,'' said T.J. Marta, senior currency strategist at RBC Capital Markets in New York. "It's positive for the European economy, because a strong euro has already done a lot of damage. But it's not good for the euro.'' For the week, the euro dropped 1.6 percent to $1.2042, the lowest close since July 26, at 5 p.m. yesterday in New York, according to electronic foreign-exchange dealing system EBS. The European currency also declined 0.6 percent to 135.44 yen. The 12-nation currency also weakened as the interest-rate advantage of U.S. government debt over European bonds widened this week to the most in more than five years. The change by China's central bank came the same day finance ministers from the Group of Seven industrial nations met in Washington. China may face pressure to allow its currency to appreciate further after Japanese Finance Minister Sadakazu Tanigaki said China's policy change yesterday wasn't "vital.'' "The decision is pretty technical and it's not vital to how the country will manage its entire currency system,'' Tanigaki told reporters in Washington after a meeting with U.S. Treasury Secretary John Snow. "A big issue is how China will manage the yuan, and we must watch how they will manage it.'' China may allow further revaluations in its currency this year, said Jim O'Neill, global head of economic research at Goldman Sachs Group Inc. in London. "It should serve as a reminder of the tiny progress that's been made,'' said O'Neill. "The pressure from Washington might rise after this weekend.'' A stronger yuan would boost Chinese consumers' purchasing power for imports from Asia and make the country's exports less competitive against regional rivals. The yuan has risen less than 0.3 percent since the People's Bank of China revalued the currency on July 21. The yen surged 2.3 percent that day. The decision by China came almost two years to the day after the G-7 countries called for more flexible exchange rates in a statement following their meeting in Dubai. "The timing may have been designed to head off some pressure that might be brought to bear on China,'' said Tim Fox, a currency strategist at Dresdner Kleinwort Wasserstein in London. "It's more of a refinement than any sort of indication of a policy change. The markets may interpret it as leading a way toward a change, but we'd be cautious about doing that.''

The euro was also hurt this week after Germany's national election ended in a stalemate and Italian Finance Minister Domenico Siniscalco resigned. The European currency fell the most in a week after results showed neither German opposition leader Angela Merkel's Christian Democrats nor Chancellor Gerhard Schroeder's Social Democrats won a majority in the vote on Sept. 18. Both have said they will attempt to form a coalition to lead the country. "The bigger picture is you have got major problems in Europe,'' said Alan Kabbani, a currency trader in Charlotte, North Carolina at Wachovia Corp. "The dollar's going to continue to get stronger'' versus the European currency, he said.
Merkel said differences with the Greens are too great to schedule a further round of talks on forming a government, signaling that she's pinning expectations on a "grand coalition'' with Schroeder's party. Merkel needs the support of the Greens, Schroeder's coalition partners for the past seven years, to form a government with her ally, the pro-business Free Democratic Party, after the inconclusive election. The CDU and FDP and the ruling coalition each fell short of a majority in the election, the first of 16 in Germany since World War II to fail to produce a clear winner.
The dollar had its third weekly gain against the euro as some investors set aside concerns about Hurricane Rita and higher oil prices to focus on the benefits to the U.S. currency of the Federal Reserve's "measured'' rate increases.
The U.S. currency also gained for the week versus the yen, advancing 1 percent to 112.48 yen from 111.34, its second straight weekly advance.

"Another catastrophic storm hitting the Gulf Coast is also unlikely to change their outlook and the course of interest rates,'' said Michael Woolfolk, a currency strategist in New York at Bank of New York. "The Fed feels comfortable continuing on their rate-hike trajectory. It is very supportive for the dollar.'' Hurricane Katrina struck the U.S. on Aug. 29, killing more than 1,000 people and becoming the costliest natural disaster in U.S. history. The extra yield offered by 10-year U.S. Treasuries over comparable German bunds reached 1.19 percentage points yesterday, the widest since January 2000. UBS AG raised its forecast for the dollar versus the euro and the yen after the bank's economists this week increased their year- end target for U.S. interest rates. The bank raised its year-end forecast for the Fed's key interest rate to 4.25 percent from 4 percent after the central bank lifted its overnight lending rate between banks a quarter- point to 3.75 percent on Sept. 20. UBS was one of four of the 22 firms that trade directly with the Fed that had predicted no change, the first time since May they have disagreed. "We have raised our one-month dollar targets versus the euro and yen this week in recognition of the shift in Fed views,'' the bank's currency strategists, headed by Mansoor Mohi-uddin in London, wrote in a note to clients. UBS now expects the dollar to drop to $1.24 in one month, compared with its previous forecast of $1.27. Against the yen, it forecasts the dollar will trade at 109 in one month, up from a previous prediction of 108. The Fed's rate compares with the European Central Bank's benchmark rate of 2 percent and almost zero percent in Japan. Economists forecast the Fed will raise rates to 4 percent by year-end, according to the median estimate of 56 analysts surveyed by Bloomberg News from Aug. 31 to Sept. 8. The yield on the December federal funds futures contract rose to 4.035 percent today, up 7 basis points, or 0.07 percentage point, for the week.

Oil, Gasoline Fall as IEA Releases Crude Oil and Fuel Reserves

2005-09-03T14:52:00.000-04:00

Sept. 2 (Bloomberg) -- Crude oil and gasoline had their biggest declines since Hurricane Katrina devastated U.S. Gulf coast production facilities and as the International Energy Agency released emergency oil and fuel supplies.
The agency will make 60 million barrels available, with 30 million coming from the U.S. Strategic Petroleum Reserve, over the next 30 days, Energy Secretary Samuel Bodman said. The Louisiana Offshore Oil Port, the biggest U.S. oil-import terminal, and pipelines have opened. The U.S. relaxed clean-air rules this week in an effort to increase fuel supplies. "The U.S. and our allies are throwing everything they have at this problem,'' said John Kilduff, vice president of risk management at Fimat USA in New York. "The IEA release may result in an increase of actual barrels. The government has an open-door policy at the SPR and relaxed EPA standards may stabilize the situation.'' Crude oil for October delivery fell $1.90, or 2.7 percent, to close at $67.57 a barrel on the New York Mercantile Exchange. The contract touched a record $70.85 on Aug. 30. Oil is up 2.2 percent for the week. Gasoline for October delivery fell 22.53 cents, or 9.4 percent, to close at $2.1837 a gallon. The October contract is up 18 percent this week. Katrina's destruction caused fuel shortages in parts of the U.S. and raised concern that the economy will slow. Companies and individuals increased spending as gasoline, diesel and jet fuel prices surged. Prices may rise before the end of the year as refiners struggle to restore output. Global demand peaks in the fourth quarter as winter arrives in the Northern Hemisphere. U.S. consumers are likely to pay $3 a gallon or more for gasoline for at least "the next six to eight weeks'' because of refinery damage, Ben Bernanke, President George W. Bush's chief economic adviser, said yesterday. The agency's move is the second coordinated release in its 31-year history. The group controls 1.4 billion barrels that can be used in emergencies. The only other time the reserves have been used was during the Persian Gulf War in 1991. The use of reserves is intended "to supplement the market forces already in place,'' Bodman said at a press conference in Washington.

Strategic Oil Reserve

Exxon Mobil Corp. will receive 6 million barrels of oil from the nations' reserve to counter supply disruptions,Bodman said in a statement yesterday. Valero Energy Corp., the largest U.S. oil refiner, said the department approved a 1.5 million- barrel loan from the reserve. Placid Refining Co. LLC said the government approved its request for 1 million barrels. "It's possible that with more oil coming into the market organized by the IEA, it will push prices a lot lower,'' said Kevin Blemkin, a broker with Man Financial in London. "Gasoline is obviously where we have the main problem.'' Regular-grade gasoline, averaged nationwide, rose 16 cents to a record $2.867 a gallon yesterday, according to data released today by the AAA, the nation's largest motoring organization. Pump prices are 55 percent higher than a year ago. One-fourth of Atlanta area gasoline stations had no fuel to sell this morning, said Georgia Association of Petroleum Retailers director Tom Smith. Smith said the state's gasoline distribution pipelines were running and stations would receive allocations of fuel throughout the weekend. Panic-buying midweek because of rumors of gasoline outages contributed to the short supply, Smith said. "The massive lines at all the stations sucked the bottom of the tank out.'' The September gasoline contract in New York touched $2.92 a gallon on Aug. 31, the last day it traded and the highest since trading began in 1984. Futures are up 83 percent from a year ago. The Nymex shut at 1 p.m. instead of the normal 2:30 p.m. today and will remain closed on Sept. 5 because of the Labor Day holiday. "What we need is gasoline and the market appears to be taking care of that, as cargoes leave Europe for the U.S.,'' said Rick Mueller, an analyst with Energy Security Analysis Inc. in Tilburg, the Netherlands. "When the spread is this wide the cargoes will come.'' BP Plc and Morgan Stanley are among companies planning to ship European gasoline to the U.S. As many as 10 tankers were booked this week to transport 363,000 metric tons, according to five shipbrokers yesterday.

Gasoline Standards

"The EPA just relaxed gasoline standards, making a greater volume available,'' said Kyle Cooper, an analyst with Citigroup Inc. in Houston. "Both chemically and physically it is easier to make winter-grade gasoline.'' The U.S. Environmental Protection Agency on Aug. 31 waived federal clean air standards for all 50 states, the District of Columbia and U.S. territories through at least Sept. 15 because of supply disruptions caused by Katrina. Refiners, importers, distributors and retailers will be able to sell gasoline that meets lower standards for emissions. "Some refiners didn't suffer as much damage as was first feared,'' Mueller said. "Once the repairs are done refiners have every reason to increase their runs.'' Royal Dutch Shell Plc, Europe's second-biggest oil company, said repairs are under way at the 225,000-barrel Motiva Convent refinery in Louisiana. The plant may start next week. Entergy Corp., Louisiana's largest utility, has restored electricity to a majority of the refineries that lost power after Katrina slammed into the Gulf Coast. The profit margin for turning a barrel of crude oil into gasoline and heating oil is $22.849, based on futures prices in New York. That has almost doubled from Aug. 26 and is almost four times higher than a year ago. Gasoline stockpiles in the U.S. have fallen for nine straight weeks and are at their lowest since November 2003, according to the Energy Department's weekly inventory report, which was released Aug. 31. Inventories are 4 percent lower than the five-year seasonal average, department figures show. "Next week's report will be incredibly bullish,'' Cooper said. "Hoarding is going on along the Gulf Coast and elsewhere, which will result in huge declines across the board.'' In London, the October Brent crude-oil futures contract fell $1.66, or 2.5 percent, to close at $66.06 a barrel on the International Petroleum Exchange. Prices touched $67.88, the highest since trading began in 1988. Next week, crude oil may rise above this week's record on concern damage will take months to repair, a Bloomberg survey showed. Thirty-one of 61 analysts and strategists surveyed, or 51 percent, said oil will rise next week. Eighteen, or 30 percent, said prices will decline and 12 forecast little change.

Dollar gains as oil prices ease

2005-08-27T01:04:00.000-04:00

NEW YORK, Aug 26 (Reuters) - The dollar firmed on Friday, supported by softer oil prices, after posting losses earlier in the session in thin summer trading, analysts said. U.S. oil futures fell more than $1 to $66.22 per barrel, as worries eased that Hurricane Katrina was not expected to significantly affect offshore crude production in the Gulf of Mexico. High oil prices have hurt the dollar in the past, given that the United States is the world's largest crude importer. Late in New York trade, the euro was down 0.1 percent at $1.2283, failing to hold intra-day highs around $1.2342, according to Reuters data. "Looks like receding oil prices are helping the dollar and also earlier in the trading session, the dollar successfully held above its intra-day low against the euro," said Alex Beuzelin, senior market analyst at Ruesch International in Washington DC. "That has set the stage for the dollar's short-term rebound. But I don't see this as anything more than continued range trading," he added. Against the Japanese yen, the dollar rose slightly to 110.15 yen, and rallied 0.1 percent against the Swiss franc to 1.2590 francs. Sterling also slipped 0.1 percent against the dollar to $1.8005. An unexpected fall in U.S. consumer sentiment for August and remarks from Federal Reserve Chairman Alan Greenspan on Friday did not have a strong impact on the dollar, traders said. Still, amid thin and listless trading conditions, Greenspan's remarks had been enough to keep the dollar on the defensive earlier. Greenspan said the Fed will pay increasing attention to asset price shifts since global economic activity was being influenced by capital gains on various types of assets and on the debt that sustains them. In prepared remarks for a speech in Jackson Hole, Wyoming, Greenspan indicated that the housing market is an increasingly important factor in Fed policy decisions. "Our forecasts and our policy are becoming increasingly driven by asset price changes," the Fed chief said.

This may be a reference to house prices, which many analysts say are reaching bubble proportions and suggest the Fed will continue raising rates. But balanced against concerns over what recent U.S. data and record oil prices say about the economy going forward, the dollar is not getting much support. "Greenspan appears to argue that whether the U.S. housing bubble ends with a hard or a soft landing depends near term upon the Fed's success in applying Greenspan's new risk management approach -- the Greenspan Put," said Michael Woolfolk, senior currency strategist at Bank of New York. "The higher interest rates go now, the more room the Fed will have cut rates when housing prices correct," he added. Indeed, dealers may be looking ahead as to when the Fed might end its tightening cycle. Currency analysts at UBS reckon the market is waiting "to see when the Fed will start signaling if it is close to the end of its cycle or not." But despite the dollar's weak tone on Friday, it is still within recent trading ranges, albeit at the lower end. John McCarthy, head of trading at ING in New York, sees the euro struggling to break above $1.2350, while dollar/yen will trade within 50 pips on either side of 109.50 yen. "The yen is the one thing that might get things going a bit," he said.

U.S. Treasuries Benefiting From a Rising Dollar, Increased Foreign Demand

2005-08-21T21:47:00.000-04:00

Aug. 22 (Bloomberg) -- U.S. Treasuries are benefiting a rising dollar and yields that are higher than on comparable German, Canadian and Japanese government bonds. The Federal Reserve's holdings of Treasuries for foreign central banks and international accounts rose $7.2 billion to $1.10 trillion in the week ended Aug. 17, the biggest increase since February. A Japanese government report last week showed the country's investors doubled their purchases of overseas bonds. Treasury notes maturing in 10 years rose the past two weeks on speculation international investors, owners of about half the U.S. government's $4 trillion in debt, will keep buying. The notes haven't climbed for three weeks since October. The dollar last week had its biggest gain against the euro in more than two months, enhancing returns for international investors who own U.S. debt. "We're got a reasonably positive view of bonds at the moment,'' said Julian Foxall, who helps manage about $10.5 billion of bonds at Pimco Global Advisors Ltd. in Sydney. "The Fed has been raising rates for some time now and the 10-year yield just hasn't moved over the whole period. We think that scenario will continue.'' Yields on benchmark 10-year Treasuries have declined to 4.21 percent, the lowest since July, from 4.39 percent on Aug. 5. Yields move inversely to bond prices. The 4 1/4 percent note due in August 2015, ended last week at 100 3/8, up about 1/4, or $2.50 per $1,000 face amount. Against the euro, the dollar gained 2.4 percent to $1.2154 last week. It has risen 12 percent from a record low of $1.3666 on Dec. 30.

High Yield Market

The two-week rally narrowed the gap between 10-year U.S. and German government bond yields to 1 percentage point, down 5 basis points from a five-year high reached on Aug. 8. Yields on 10-year Treasuries exceed those on bonds sold by every other Group of Seven country except the U.K. A year ago, they were higher than just half the G7. British 10-year gilts yield 6 basis points more than Treasuries, down from 74 basis points a year ago. A basis point is 0.01 percentage point. The U.S. has become the "the high yield market'' of choice for investors, said Richard Gilhooly, government bond strategist in New York at BNP Paribas SA, France's second-biggest bank. The firm is one of the 22 primary dealers of U.S. government securities that are required to bid at Treasury auctions. Surveys show a rising enthusiasm for U.S. debt. Ried, Thunberg & Co.'s index on the outlook for the 10-year note is at 49, the highest since March 2004, and up from a low this year of 38. The 36 international investors surveyed by the Jersey City, New Jersey-based bond-research firm manage $1.3 trillion. A reading below 50 indicates participants expect the note's yield to rise by the end of September.

Fed Expectations

Buying Treasuries and selling European government bonds may be "one of the top trades for 2006,'' as the Fed increases in overnight lending rates damp economic growth just as Europe's expansion accelerates, debt strategists at Merrill Lynch & Co. said last week. "Our worry is that the Fed overdoes it,'' said Kenneth Taubes, who oversees $16 billion in bonds at Pioneer Investment Management in Boston. "They are certainly showing no signs of being finished here.'' The Fed on Aug. 9 raised its benchmark rate by a quarter point to 3.5 percent, the 10th increase since June 2004. A Bloomberg survey of the primary dealers earlier this month found that 20 expected the central bank to increase the so-called federal funds rate to at least 4 percent by year-end. Fed policy makers, even amid concern that record high energy prices will slow the economy, repeated a plan to push rates higher at a "measured'' pace. Ried Thunberg reported 72 percent of its survey respondents said near-record energy prices are beginning to impede economic activity.

Oil and Inflation

Crude oil for September delivery reached an all-time high of $67.10 on Aug 12. Wal-Mart Stores Inc., the world's largest retailer, last week said its second-quarter profit rose by the smallest amount in four years, slowed by record gasoline prices. The Fed reiterated that inflation expectations were "well contained,'' a surprise to some investors who expected the central bank to be more concerned after a six-week slide in Treasuries sparked by increases in employment, manufacturing and consumer spending. The 10-year Treasury yield was 4.44 percent before the central bank's Aug. 9 statement, "It's a very dovish, soft-handed approach when people were expecting a slap on the behind,'' said David Petrosinelli, who manages $5 billion of bonds at Shay Assets Management Inc. in Chicago.
Consumer prices, excluding food and energy, rose 0.1 percent in July, the same as in June, the government said last week. A 0.2 percent increase was the median forecast in a Bloomberg survey of 63 economists. U.S. debt prices also rose last week after Japan's Ministry of Finance said on Aug. 18 the nation's investors bought a net 154 billion yen ($1.39 billion) of foreign bonds in the week ended Aug. 13, the most since the week ended July 23. "It could be the increase of the U.S. interest rate in the longer-term'' that makes Treasury yields attractive, said Takahira Ogawa, director of sovereign ratings at Standard & Poor's International in Singapore. Ten-year Treasuries yield 2.79 percentage points more than the Japan's 10-year bonds, up from the past year's low of 2.5 percentage points reached on Oct. 22.

Rising dollar has best week vs euro since June

2005-08-19T23:22:00.000-04:00

NEW YORK, Aug 19 (Reuters) The dollar edged up against a basket of major currencies for the fifth straight session on Friday, tacking on its biggest weekly gain against the euro since early June. A series of U.S. economic reports this week a strong reading of the Philadelphia Federal Reserve Bank's index of business activity and data showing strong capital inflows to U.S. assets have bolstered the case for continued dollar supportive interest rate hikes by the Federal Reserve. Investors "are putting money into dollars," said JoeFrancomano, vice president of foreign exchange at Erste Bank. "It's a safe trade given the rate outlook." The dollar index <.DXY> rose to its highest since Aug. 3 at88.90 before paring gains, to 88.58 by late afternoon. The euro was down 0.1 percent from Thursday at 1.2165, after falling as low as 1.2127 its lowest since Aug. 1. The euro is down 2.4 percent this week, its biggest weekly decline since the week ended June 5. However, the euro is almost right in the middle of a summer long trading range, suggesting investors are comfortable waiting for a significant breakout in either direction. "The price action is bound to undermine the conviction of both the dollar bulls and bears," said Marc Chandler, partnerwith Terra K Partners LLC, a financial firm in New York. "And with the summer holidays here and the absence of much in the way of key economic data, the simplest and most likely scenariois for a range trading affair," he said.

Speculators established a small net short dollar position for the first time in over four months, according to the latest IMM data for the week ended Aug. 16. As a testament to recent strength in sterling, short term investors have flipped to a net long position in the currencyfor the first time since early May. Sterling was relatively unchanged at 1.7964, whilethe dollar was up 0.2 percent against the Swiss franc at 1.2745 francs. The dollar also hit a one week high of 110.83 yen before trimming its gains to 110.43 yen, nearly flat from the prior session.
Technical analysts at Merrill Lynch said the dollar fell slightly short of closing above the key level of 110.80 yen.
"A decisive close above this level would neutralize third quarter downside risk, and improve the opportunity for a renewed challenge to 113.00," they wrote in a research note. Analysts say investors will remain cautious about buying yen aggressively ahead of Japan's Sept. 11 election, although expectations are rising that Prime Minister Junichiro Koizumi will gain public support for his reform plans. Little major U.S. economic data are due next week, and Japanese trade figures are due only on Thursday, leaving markets stuck in waiting mode.

FOMC on autopilot for 10th straight rate hike

2005-08-06T18:54:00.000-04:00

WASHINGTON (AFX) The FOMC is expected to hike rates by a quarter percentage point on Tuesday and stick closely to past statements about the economy. "The Fed looks to be on autopilot, set to raise rates a quarter point at every meeting until GDP growth is closer to 3 or the job market flags," said Avery Shenfeld, economist at CIBC World Markets in Toronto. But analysts are wondering whether the central bank might express some greater unease about the outlook for inflation. This would not so much indicate that the Fed was going to increase the size of its rate hikes, but that the duration of higher rates may be longer than the market now expects. The FOMC is expected to raise the Fed funds rate by a quarter percentage point to 3.5, the tenth straight meeting with a quarterpoint hike. The central bank's statement released following the meeting is seen repeating that rates remain accommodative, which can be removed at a "measured pace." Recent revisions show the Fed's favorite gauge of inflation, the core personal consumption expenditure index, has been generally higher over the past year than previously thought. "There may be a slightly more worried tone about inflation," said Josh Shapiro, chief U.S. economist at MFR Inc. There were hints in the minutes of the FOMC's June 29-30 meeting that Fed officials are divided into several camps about how high rates must go in the current tightening cycle, said Dan Seto, senior economist at Sumitomo Mitsui Asset Management, "I think the ongoing tension within the FOMC is the thing to watch," Seto said. But some economists said they were not expecting any significant changes to the Fed statement, "I don't think we'll get any statement changes only because they seem so unwilling to provide hints like that," said James Glassman, economist at JP/Morgan Chase.

Given the recent string of strong economic reports, including Friday's strong 207,000 increase in nonfarm payroll jobs in July, some economists see the Fed's steady rate hikes continuing through the middle of next year. Seto of Sumitomo said he sees the Fed funds rate reaching 5 by the middle of next year. Some economists are worried that the Fed might overshoot, hiking rates too much and slowing the economy. "I think the Fed is going to keep raising rates until it says 'oops'," said Robert Brusca, chief economist at FAO Economics. The key economic reports will come after the FOMC meeting, with the Commerce Department releasing the July retail sales data on Thursday and the June trade deficit on Friday. Economists surveyed by MarketWatch are expecting a 1.8 gain in July retail sales, just ahead of the 1.7 rise in June. It would be the strongest sales month since September 2004. The retail sales report will be released at 8:30 a.m. Eastern on Thursday. Excluding autos, sales are expected to be up 0.6, compared with a 0.7 rise in June. Sales of cars and trucks posted a 20millionunit annual pace in July, the highest since October 2001. The June trade deficit is expected to widen slightly to 56.9 billion from 55.3 billion in May. One lesser known report may get greater attention than usual on Tuesday before the Fed meeting, when the Labor Department releases its second-quarter productivity report, which includes an estimate for unit labor costs in the April-June quarter. Unit labor costs are expected to 3.0 rise, after rising 3.3 in the first quarter. Fed chief Alan Greenspan said the central bankers would be paying close attention to any increase in the costs of labor, which could be passed on to consumers in the form of higher prices

US Dollar Index 15 Year Seasonal Tendancy...August Bullish

2005-07-31T20:30:00.000-04:00

US Dollar Index 15 Year Seasonal Tendancy......

We have an interesting upcoming week in store with the strong US GDP Data last Friday providing the FED the needed stimulus for their current Rate Hike campaign...the US Dollar Index has sold off to the latest positive US Data as the Market has been prepared for a Technical Correction...where the Majority are Positioning against the USD... beware for another North advance in USD has the 15 Year Seasonal Tendancy at work where a US Dollar Index Rally occurrs from the begining of August thru the 3rd week of the month. Therefore my Bullish USD Bias remains. A Great Week to All.....Iris

US GDP Fundamentals strong...USDollar Index Bull to continue

2005-07-31T15:01:00.000-04:00

Pre-Open...7/31...12:01Pm EST

Hello Everyone..........

On Friday after the US GDP 2nd QTR Data release the Top of the Range breakouts were contained for Eur/Usd<>Cable<>Aud/Usd with the US Dollar Index consolidating its North advance and with the US GDP Data showing continued strength in the US Economy...the USD Bulls will relish in this and prepare for another North advance.

From Friday 7/29...prior tho US GDP Data........

The Single Currency US Dollar Index has been discounting the positive US Data with controlled Exits on USD Longs....thus the Market counter moves to positive Data...Safe Exits. On Friday US GDP will have whipsaws to clear the path for Eur/Usd<>Cable and the other Majors into upcoming Directional moves...and at Times such as these its best to let the Market tiddy up a bit until it proves its Course of Action....

Eur/Usd North breaks at 1.2165 will Target an advance onto 1.2260<>1.23........
Eur/Usd South breaks at 1.2080 will Target a decline to 1.20<>1.1980<>1.1950.
Cable North advance breaks at 1.7590 will Target 1.76<>1.7720....
Cable South decline break at 1.7480 will Target 1.73<>1.7260.

After US Data on FridayMorning these levels will set the next Directional course.

Containment Zone/Entry Window Technique of Time/Price

2005-07-30T07:05:00.000-04:00

A Containment Zone is were I see Time/Price to Reverse North or South...ie an Entry Window...were a shift in Directional Movement is about to occur and a Zone of Opportunity is Open whether North or South...with Stops placed above/below the Containment Zone/Entry Window to then trail into an Exit...be it 5/10/15/30 minutes into1hour<>1day<>3days whatever...if containment is at those levels then a Entry Window is opened at the Posted levels and forward...then Entries would scale into the Target levels were Exit is determined by Ones management thru successive Levels...to negate the Containment Zone...Price would move thru it within the current Directional Movement and take out the Stop.

When Time/Price moves thru the Containment Zone/Entry Window it is negated by the Stop being hit ...which means that the prior Zone acts as secondary Support/Resistance to the next Entry...for the prior Zone to become valid again containment within a retest of that Zone would Signal adding to Positions or confirmation that current Directional Movement from a higher/lower Entry will be sustained for the Target areas. Also setting a Reverse Limit Order Entry just above the Stop would attempt to capture back the initial Stop Loss being hit for more continuation until the next level is reached for a Counter-Trend Entry ...thus attempting to nullify the prior Zone/Stop Loss being triggered and re-Positioning for a better Entry Window.

A Containment Zone is a Support/Resistance Reversal Point in current Directional Movement for a High percentile Counter-Trend Entry thru a specific Range...ie a Sell/South<>Buy/North Window that captures a larger percentage of the Range of the move.

Ultimately Trading is about Directional Movement...that is the nucleus of Trading so therefore its dependant upon how that Dynamic is forming...as my Friend Currencia says..."you can only Enter in the Now and Exit in the Future"... and what if you could Enter in the Now and have predefined Targets that are not dependent upon Price...but Time and how current Directional Movement evolves to a Targeted Exit. That is how my proprietary technique on the Containment Zone/Entry Window functions...your focus is on the expansion/contraction in Directional Movement within the Trading day. Now couple that to the 24Hr Trading Day...the majority of volume in FX is done between London and New York...were the Asian Session will Trade 1/4 to 1/2 at times of the Range of the prior Sessions each day...on News or Central Bank Positioning more pronunced moves from Asian Session are obvious... especially as they challenge or surpass the total Range of the day. London and New York in FX is the largest Traded volume on the Planet...this is were Trading/Directional Movement makes 80%+ of the moves of the day and the Best Traders of the World compete...for me I have no particular Session for Entry as it is based on the contraction/expansion in volitility within Directional Movement within Time...that is were you Win or Lose.

The Best Time of day for Entries from my standpoint is on the above...Directional Movement and how that Dynamic is about to Position...sometimes its Asian...other Times it New York or London...its the Flow of Time into Price and isolating a Containment Zone/Entry Window at the Reversal/Continuation points within that 24HR period and Positioning into the upcoming Flow. If you prefer more controlled Entries...Asian Session is for you...if you can Enter on the Fly...London or New York...Exits also...but the caveat you must assess is I've gained X amount of Pips from this Range and based on current Directional Movement whats left in momentum and velocity to capture the highest percentage of the move before a retrace and will that retrace be within acceptable boundaries to continue on to my next predefined Target Zone...or should I Exit at that level ...Buy/Sell the retrace or Enter at a Higher/Lower level. Know matter how you analyze it its about Trading Directional Movement within Time...to an Entry/Exit and were currently as your calculating the chart in front of you at that moment in Time is the next opportune Window....Asian<>London or New York.........Iris