Monday 22 November 2010

LME LATEST - Chinese 'pulling base metals' strings'

- Base metals were under pressure during Friday’s open-outcry sessions at the LME after a long week of extraordinary volatility, as China’s decision to raise interest rates sent commodities and equity markets lower.

- Traders on the floor of the LME were spooked by inaccurate information published by Reuters earlier in the morning, which mistakenly showed that the Chinese cut the base rate and not the reserve rate by 50 basis points - “A much bigger deal”, according to one LME trader. This news triggered a sharp $80 sell-off in copper of nearly one percent simply based on a false premise. “The markets are overreacting to everything at the moment,” the trader added.

- “I feel really manipulated by the Chinese,” a second LME trader said. “It’s as if we’re their puppets.” Markets have remained focused on what measures China will take to cool inflation, which is currently running at 25-month highs. Traders also cite worries that the Chinese will release unreported stocks of metal soon to tame prices.

- Copper traded at $8,391, almost flat with yesterday’s close, after trading above $8,500 earlier in the session. Aluminium traded at $2,294, down $20, while zinc and lead also recorded losses. The dollar weakened against the euro, meanwhile, to around the 1.37 level.

BULLION LATEST - Gold drifts to session lows after China rate news, euro cuts gains

 - Gold prices drifted lower during early afternoon trade on Friday, as the euro cut some earlier gains versus the US dollar, while China’s decision to raise interest rates contributed to send markets lower.
- Spot gold, which was caught in light profit-taking this morning, extended losses to a session low of $1,342.90 per ounce at one stage, down $17. It was last seen at $1,345.10/1,345.90 per ounce, still down $16.80. On the charts, the metal’s next support is at 50-day moving average of $1,340.
- The euro was trading at 1.3660 versus the US dollar, while markets remain focused on what measures China is taking to cool inflation, which is currently running at 25-month highs. The country’s central bank raised bank reserve requirements by a further 50 basis points after a previous increase two weeks ago. Lower inflation are negative for gold, usually seen as a good hedge against inflationary concerns. Investors were also awaiting fresh news on the potential Irish economic bailout.
- In other precious metals, silver was down 89 cents to $26.48/26.53 per ounce, while platinum fell $25 to $1,648/1,654 per ounce and palladium was down $9 to $693/698 per ounce.

LME LATEST - Copper and tin claw back lost territory, leave rest of complex behind

- Copper and tin recovered from the mid-day sell-off on the LME on Friday afternoon after news that China’s central bank raised banks’ reserve requirements for the second time in two weeks roiled markets. The rest of complex failed to attract similar buying, however.

- Copper traded at $8,460 per tonne, up $94, while tin was up $450 at $24,450. Copper volumes were high again, with more than 15,000 lots traded on LME Select. The rest of the complex was lower, however, with aluminium trading at $2,293, down $10, and nickel at $21,858, down $42. Zinc was flat, trading at $2,190, while lead fell $48 to $2,290.

- The Chinese move was largely anticipated by markets but traders are now looking for clues as to whether anything further will be announced over the weekend with respect to interest rates. “Even if we do not see any new moves by the Chinese, the fact remains that with each successive round of eventual Chinese tightening, corrections could come our way more quickly and will exhibit much greater staying power,” MF Global analyst Ed Meir said.

- This week, analysts at nine banks surveyed by Bloomberg News predicted that China will raise rates by the end of December, which could trigger further volatility in January 2011.

Wall Street trading lightly in the red (Barcelona) - US stocks are trading in negative territory on Friday, following a day of impressive gains on robust macroeconomic fundamentals. The mood has shifted today however as China announces further tightening measures while uncertainty regarding euro-zone sovereign debt lingers in the marketplace.

After an hour of trading, major indices in New York track their global counterparts to the downside. The DOW is showing a modest loss of 12 points or 0.11% so far, while the NASDAQ and S&P drop by 0.12% and 0.20% respectively.

On a day of light volume due to little economic information, China´s move to raise banks´reserve requirements came on the heels of Fed chief Ben Bernanke defending the recent QE2 measures at a conference in Frankfurt, while criticizing the Asian giant for running a huge surplus. In particular, Bernanke argued that yuan appreciation is happening at too slow of a pace resulting in global imbalances and slow growth for its trading partners.

Crude oil edges higher on Ireland bailout (Barcelona) - Reacting to the news that the Irish government formally applied for aid over the weekend, markets are beginning the week with improved risk appetite driving crude prices to the upside. The front-month crude contract currently trades at $82.67 a barrel, where it is nearly $0.50 higher since open.

The main driver of crude prices today is a weaker US dollar against the euro. The announcement of an Irish bailout is helping to ease concern in the common currency, which has weighed heavily in recent weeks. A weaker greenback against principle rivals makes crude, as well as other dollar-denominated commodities, less expensive and thus more competitive on international markets.

With little economic information of importance to be released today, commodity traders will continue to focus on the details of the Irish debt situation and speculate on the possibility of contagion to the other periphery nations.

US GOLD - Comex gold closes level as dip-buying pares earlier losses

New York 19/11/2010 - Gold on the Comex division of the New York Mercantile ended a volatile week on a muted note as bargain hunters placed a floor under prices and many investors sat out the day due to continued uncertainly over the Irish debt crisis.
Gold futures for December delivery closed Friday down 70 cents at $1,352.30 an ounce. The yellow metal was down about 1 percent for the week.
"There's plenty of market fatigue plus there's some lack of knowledge by market participants about exactly what is going to come out of this Ireland bailout. That, along with the amount of volatility we've had, is pushing some people to the sidelines," Sterling Smith, an analyst with Country Hedging, said.
It now appears that Ireland, whose banking system has been badly damaged by the collapse of the housing market, will likely seek a bailout from the European Union after initially dismissing the idea; however, the shape and size of the package is still unclear.
Nevertheless, a more positive tone out of Ireland led the euro to gain modestly to 1.3678 against the dollar, up from 1.3635 Thursday.
But even a resolution to Ireland's problems doesn't spell the end of Europe's sovereign-debt issues.
"Once you open up the bailout barrel, everyone is going to line up to ask for theirs. Credit default swaps on Portugal, Spain and Italy all moved up overnight, which shows that the market is starting to appraise more risk in those countries," Smith said.
Gold reached its intraday low of $1,342.50 in the early morning hours soon after China announced that banks there will have to put up 0.5 percent more in reserve requirements in a bid to combat inflation. Commodities traders worry that a change in the bank reserve ratio will make it more difficult obtain hard assets.
However, gold was able to recover most of those losses later in the session as end of the week bargain hunters emerged in the marketplace.
"There was definitely some buying on dips, which is indicative that the market is going to turn bullish, but I don't think anyone wants to be too aggressive in front of a short week," Smith said.
MKS Finance SA said in a note that gold's near-term trajectory is still quite cloudy.
"While a deeper correction shouldn't be ruled out, with gold falling as low as $1,250 as year-end approaches, ongoing uncertainty created by euro-zone debt issues and another round of quantitative easing in the US are expected to continue to attract buyers to the perceived safe-haven asset," MKS said.
In the other precious metals, Comex silver for December delivery closed up 34.5 cents at $27.179 an ounce.
Platinum for January delivery on the Nymex was up $23 at $1,663.90 an ounce, while December palladium settled up $7.95 at $695.50 an ounce.

LME LATEST - Metals trade sideways, hold gains on steadier euro

- Base metals settled into a sideways ranging pattern on the LME on Monday morning, largely holding modest gains. They were underpinned by the euro's steadiness after the weekend Irish financial bailout package and consolidating in the middle of the session's ranges. Despite the multi-billion-euro loan package that Ireland has requested, sovereign debt will remain an issue in the eurozone, so sentiment in the metals complex has been laced with caution.

- Copper, which stalled above $8,500, was trading lightly at $8,430 per tonne, still a $26 advance from Friday. Inventories continue to decline - they fell for the 12th day in a row, down 825 tonnes to 359,000 tonnes, the lowest once more since October 20, 2009.

- Aluminium was hemmed in below the $2,400 level, with business at $2,293, up $29 still. There was a 4,100-tonne fall in stocks to 4,298,025 tonnes. Nickel business at $22,000 was up just $150 while stocks recorded their fourth successive daily decline from what had been five-month highs, dropping a net 90 tonnes to 130,014 tonnes.

- Cobalt inventories, which have been declining modestly in recent days, reversed that trend and jumped 8.6 percent or 15 tonnes to 189 tonnes, due to warrantings in Rotterdam.

BASE METALS European Opening View - Metals get some lift as dollar weakens

The metals started off by extending their rebounds on Friday, with prices seeing average gains of 1.5 percent at the day’s highs, but then selling emerged and prices ended the day with an average loss of 0.8 percent, although the performance was mixed. By and large the metals are in consolidation mode, whether they are also forming bear flags remains to be seen. That said, with China announcing price caps and increase banks’ reserve requirements and Ireland agreeing to an EU rescue package, risk aversion may ease now.

This morning the metals are up an average 1.1 percent, with lead up 1.8 percent at $2,315, copper is up 0.3 percent at $8,464, while aluminium is up 1.2 percent at $2,303. Volumes have been average, with 2,751 lots of copper and 1,301 lots of zinc traded, see table on right for more details.

In Shanghai the February contracts are off slightly across the board with average losses of 0.2 percent as they followed the LME’s lead from Friday. Copper is at Rmb 63,310, aluminium is down 0.2 percent at Rmb 16,400 while zinc is down 0.5 percent at Rmb 17,800.  Spot copper in Changjiang is 0.5 percent firmer at Rmb 63,000-63,400, while the LME/Shanghai copper arb remains firmly shut.

The dollar is weaker as the Euro has moved higher on the back of Ireland’s rescue package, it is last at 1.3784, the pound is firmer at 1.6060, the aussie is stronger at 0.9950 and the yen is firmer too at 83.40. Gold is stronger at $1,365 – aided by the weaker dollar, while oil is firmer too at $82.75.

Equities – the Dow closed up 0.2 percent on Friday, performance in Asia has been mixed with the Nikkei up 0.9 percent, the Hang Seng is down 0.4 percent, China’s CSI is down 0.2 percent and the MSCI Asia Apex is up 0.4 percent. So a mixed bag, although European equities are likely to start off on a positive footing given the Irish news.

On the economic front there is little data out, EU consumer confidence is out at 3pm GMT and President Trichet is talking at 4pm GMT.

So after the gyrations of last week the metals start this week in the middle of last week’s ranges – they have unwound both the early November overbought conditions and last week’s oversold conditions and are now waiting for fresh direction. On balance we would say prices were difficult to justify at the highs and with China now trying to rein in inflation, the fact that Ireland has had to seek assistance could mean there is more trouble ahead for Europe and with austerity going to be felt more in the months ahead, we feel prices are still over priced.
LME Overnight Performance
  7:20 AM +/- +/- % Lots
Cu 8464 24 0.3% 2751
Al 2303 27 1.2% 521
Ni 22170 270 1.2% 178
Zn 2205 25 1.1% 1301
Pb 2315 42 1.8% 189
Sn 25300 200 0.8% 9
Steel Med 516 0 0.0% 0

Economic Agenda
Time Country   ACTUAL Expected Previous
EU  Consumer Confidence   -10 -11
4:00pm EU  ECB President Trichet Speaks      

LME MORNING - Metals stable, supported by steady euro; complex cautious still

London 22/11/2010 - Base metals settled into a routine sideways trading pattern during Monday morning LME trading, having pulled back to consolidate below early highs but broadly underpinned by the steady euro and the financial rescue plan for Ireland that that was agreed yesterday.

Despite the multi-billion-euro loan package that Ireland has requested, sovereign debt will remain an issue in the eurozone, so sentiment in the metals complex has been laced with caution.

"Funds generally derisk ahead of Thanksgiving and the Christmas break, hence the profit-taking seen last week," John Meyer of broker Fairfax said.

The euro was trading around 1.3735 against the dollar. As well as a steadier euro, share markets were also higher, helping to defuse one element of uncertainty that has overhung the base metals complex so far this month, causing some hefty price falls.

"Over the past weeks, the price trend in industrial metals had been fairly bumpy with several temporary corrections and recoveries," broker Credit Suisse said. “Nevertheless, the sector is still within a fairly strong uptrend.”

"With the market focus now turning away from sovereign debt problems in Ireland, we think that economic fundamentals are likely to come back to the forefront," it added.

The terms of Ireland's financial rescue plan are to be negotiated over the coming days. On Sunday, the Irish Government agreed to make a formal request for a multi-billion-euro loan package to the European Union and the International Monetary Fund.

These loans are to tackle the country's banking and budget crisis in a bid to protect Europe's financial stability.

Nevertheless, the wider backdrop will continue to sway price movement and sentiment for the metals, with China and further monetary developments still in focus. China on Friday raised cash reserve requirement for banks, the second such move in a fortnight, stepping up its battle to tame inflation.

Advances in the metals complex were measured, however, with the market still rebuilding momentum after the steep sell-off and across-the-board technical corrections.

"We would say prices were difficult to justify at the highs and, with China now trying to rein in inflation, the fact that Ireland has had to seek assistance could mean there is more trouble ahead for Europe," William Adams of FastMarkets said.

Action this week is likely to be compressed - US markets are closed on Thursday for the Thanksgiving Holiday. Today, apart from EU consumer confidence figures later, there are no significant data releases so price movements are likely to reflect currency swings and technical signals.

"The economic focus will remain on the third-quarter preliminary US GDP data due for release tomorrow," Fairfax's Meyer said.


Copper stalled above $8,500 earlier and ranged back to trade recently at $8,410 per tonne, up just $6 from Friday. Inventories continue to decline - they fell for the 12th day in a row, down a net 825 tonnes to 359,000 tonnes, the lowest once more since October 20, 2009.

Feb copper minis saw recent business at $8,424, with 10 lots changing hands - brokers from today are quoting the five-tonne cash-settled contracts more actively.

On the physical side, reports circulated that Chile's Codelco had raised annual physical copper premiums for Chinese buyers by 35 percent to $115 per tonne for 2011. So far it has raised premiums to Japanese, South Korean and European buyers to $98 per tonne.

Aluminium was hemmed in below the $2,400 level, with business at $2,291, up $27 still. There was a 4,100-tonne fall in stocks to 4,298,025 tonnes.

Nickel business at $21,900 was up just $50 while stocks recorded their fourth successive daily decline from what had been five-month highs, dropping a net 90 tonnes to 130,014 tonnes.

Elsewhere, zinc traded at $2,170, up $10, with stocks falling 400 tonnes. But lead fell back to $2,270, down $7, despite a 200-tonne inventory decline. Tin rose $100 to $25,100 although inventories rose again - up 100 tonnes.

Cobalt inventories, which have been declining modestly in recent days, reversed that trend and jumped 8.6 percent or 15 tonnes to 189 tonnes due to warrantings in Rotterdam. There were no movements in headline molybdenum and steel billet stocks.

BULLION MORNING - Gold rangebound but stronger euro, macroeconomic woes support

London 22/11/2010 - Gold was rangy in Monday morning trade, supported by a stronger euro after the Irish financial bailout was confirmed, while persisting macroeconomic uncertainty maintained safe-haven interest.

Spot gold reached its highest in almost a week at $1,365 but is trading within a relatively tight band - it was last at $1,359.80/1,360.60 per ounce, up $6.30 from Friday. On the charts, next resistance is set at the uptrend line of $1,366 and then $1,376, with support pegged at the $1,342 support line and around the recent low of $1,329.

On Sunday the Irish Government agreed to make a formal request for a multi-billion-euro loan package to the European Union and the International Monetary Fund, with terms to be negotiated over the coming days. These loans are to tackle the country's banking and budget crisis in a bid to protect Europe's financial stability.

But fears of the effects of Chinese fiscal tightening last week - it raised the cash reserve requirement for banks for the second time in two weeks on Friday - combined with lasting fears of debt contagion in the eurozone despite the Irish aid package are keeping safe-haven demand well supported.

"Since investment demand continues to be strong and US bond yields remain at a very low level, we would argue that prices have further upside," broker Credit Suisse noted. "However, the uptrend is likely to be less steady in the future as sentiment looks shaky.”

Gold has struck repeated record highs in recent weeks, bolstered by store-of-value-related buying on inflationary fears and a subsiding dollar, to hit a lifetime best of $1,424.60 on November 9.

But a steep correction in recent sessions - it fell as low as $1,329.80 last week - has heightened expectations of volatility in the near term, market participants said.

"While a deeper correction shouldn't be ruled out, with gold falling as low as $1,250 as year-end approaches, uncertainty created by eurozone debt issues and another round of quantitative easing in the US are expected to continue to attract buyers to the perceived safe-haven asset," broker MKS said.

The euro struck its most expensive since November 11 against the dollar at 1.3786 this morning, buoyed by news of the Irish bailout - it has since settled back to 1.3734, still up around half a cent.

And European equities were solid in early trading, trading between 0.3 percent and 0.5 percent higher.

Only eurozone consumer confidence figures are due in a light day for data, although ECB president Jean-Claude Trichet is due to speak this afternoon.

Among other precious metals, silver was at its most expensive since November 10 at $27.92 per ounce earlier this morning before paring gains but, at $27.54/27.59 per ounce, was still up 20 cents.

Platinum rose to its costliest in almost a week at $1,676 per ounce before settling at $1,666/1,671, flat from the previous session.

Palladium gained $6 to $709/714 per ounce - it had hit its highest since November 10 at $714 earlier.

LME LATEST - Metals slide back in rings as sentiment softens, euro loses ground

- Base metals were largely on the defensive during the open-outcry sessions on Monday, as the early upbeat mood gave way to increased caution, and with the euro losing some its initial steadiness prices in the complex drifted lower.

- The euro, which had been around its highest for a week or so at 1.3786 against the dollar, fell away to 1.3665 recently as the knee-jerk uptick to Ireland's proposed financial bail-out petered out and worries over sovereign debt contagion remained. Share markets, which were steadier earlier, also eased, with European equities around 0.3 percent lower at midday.

 - Copper, above $8,500 in Asia, retreated near to $8,360 before settling at $8,369 per tonne, a $35 loss from Friday. Aluminium, in contrast, held at $2,290, still up $26.

 - But zinc dropped to $2,151, a $9 loss, while lead eased back to $2,250, a $27 decline. Nickel business at $21,759 was down from a previous $21,850.

European stocks coming off morning highs due to Irish rescue package (Barcelona) - Equities over the European continent benefited early from the weekend news that Ireland had finally formally applied for EU/IMF funds in order to stave off default. The initial wave of optimism has somewhat worn off however by mid-day, with the FTSE 100 hanging around even while the DAX and CAC 40 post gains of 0.31% and 0.05% respectively.

The late Sunday announcement that Ireland had succumbed to EU pressure to accept bailout funds gave investors reason to celebrate on Monday morning, however with details still to be clarified there remains some slight uncertainty lingering in the marketplace. The question now is whether other periphery nations like Portugal and Spain will be next in line, or stability in the community can be re-established.

In the London market, resource firms are some of the best performers so far with Vedanta Resources up nearly 2.0% while Xstrata gains by 0.50%. The financial sector on the other hand remains in the negative due to exposure to Irish debt, with the Royal Bank of Scotland down nearly 3.0%, while Lloyds Banking Group drops nearly 2.0%.

BOJ’s Morimoto: Expansion of asset buying one strong option if economy worsens – Kyodo

Always on guard against rapid forex moves Japan long-term yields rising somewhat, want to watch closely FOMC's QE aimed at supporting US economy Won't comment on other central bank's monetary policies BOJ's assrt buying is different from Fed as it includes risky assets May take one year or more for asset purchases to have impact

RBA: Deputy-Governor Battelino with another bullish outlook

Recent modest tightening made to guard against inflation risks Chinese and Indian demand for resources could stay strong for 20 years; iron ore and coal prices have been rising again recently Excessive slowdown in China unlikely Business investment is high and unemployment should stay low Inflation could become a significant policy issue in Asia if growth

Fed to trim growth forecast (Barcelona) - Ahead of tomorrow's release of the latest FOMC meeting minutes, the Financial Times reports that they will reveal grimmer forecast of the economy through 2013. The revisions to the outlook are to affect growth, unemployment and inflation, and the minutes will show committee's members concerns as to the implementation of the $600 billion asset purchase decided by the Fed.

In their last forecast, published in June, members within the open market committee expected growth in 2011 to range between 3.5% and 4.2%. As events unfolded since the summer, those expectations are to suffer a revision a be trimmed to 3 - 3.5 per cent.

In terms of unemployment, currently at 9.6%, the forecast of between 7.1% - 7.5% by the end of 2012 is likely to be left behind in favor of a bleak 8%, or even above that.

As for inflation, the Fed's target of 2% or a little below is to remain subdued, Chicago Fed Evans said that a 1% inflation in 2012 would not be out of the picture and that less than 1.5% in 2013 is also a possibility.

These reactions along with how much support QE2 has within the committee will give investors clues as to whether the plan will go on as planned or be cut short if risks pile and benefits fail to materialize. There is a third option, if at this juncture when the economy has no traction, the Fed's response was QE2, will they extend it if the forecasts become a reality?

ECB’s Gonzalez-Paramo: Ours are little 


ECB bond buys are small volume compared to other countries Spain needs to improve communications on the reforms it plans Excess liquidity in money markets reduced by 90% since summer That last bit has been a boost to the euro as money market rates have "normalized" in recent months.

Sunday 7 November 2010

Forex: EUR/USD recovery constrained below 1.4120 (Barcelona) - Euro rally topped yesterday at 1.4280, and the pair has given away more than 200 pips on Friday to hit session low at 1.4030 after upbeat US employment data, and recovery attempts remain capped below 1.4120 intraday resistance so far.

On the upside, immediate resistance lies at the mentioned 1.4120, and above here, 1.4180 (previous lows), and above here and 1.4245 (session high). On the downside, support levels lie at 1.4030 (session low), and bellow here, 1.3990/00 (Nov 3 lows) and 1.39510 (Oct 29 high).

Technical indicators show the pair exhausted to the downside, according to Valeria Bednarik, technical analyst at, suggesting further recovery: "Technically, hourly indicators look exhausted to the downside, suggesting some further recovery yet to be confirmed once the pair overcomes 1.4120 immediate resistance zone."

Gold bullion threatening $1400 milestone (Barcelona) - Gold futures are setting new historic records for a second-consecutive day, as investors rush to the safety of the metal in the wake of the Fed´s QE2 announcement. In early trading over NY, the most active gold contract for December delivery trades at $1396.80 a troy ounce as it leans toward the $1400 milestone.

The safe-haven appeal of gold has been markedly amplified since Wednesday´s Fed announcement, due to the fact of a weakening US dollar. Today, the yellow metal dipped over Asia and Europe on profit-taking as well as a better-than-expected US NFP report which gave the greenback some breath. Nonetheless, the upside momentum is overshadowing the upbeat employment report as demand remains high.

Forex: USD/CHF, capped at 0.9640, back to previous range (Barcelona) - Dollar rally witnessed after Non Farm payrolls has been short lived, as the pair, capped at 0.9640 session high has pulled back returning to previous trading range, between 0.9550 and 0.9600.

The pair is trading at the moment at 0.9570, with next support levels at 0.9550/55 (session lows), and below here, 0.9510 (Daily pivot point S1) and 0.9460 (Oct 14 low). On the upside resistance levels lie at 0.9640 (session high), and above here, 0.9690/00 (Nov 2/3 lows) and then 0.9735 (Nov 4 high).

The pair seems likely to resume its bearish trend, according to Valeria Bednark, technical analyst at "With hourly indicators however still bullish; below 20 SMA now around 0.9590, pair will likely resume its bearish trend, while daily close below 0.9600 should signal fresh historical lows for the upcoming week."

Forex: Majors wait for US housing data (Buenos Aires) – Following better than expected US employment data and mixed spikes across the board, majors had settle down in tight ranges, waiting for the last fundamental number of the week, the US Pending Home Sales. Expected around 3.2% compared to previous month 4.3%, dollar remains under pressure with gold nearing $ 1400/oz, setting a fresh record high around $ 1398. Market anyway, is mixed today, as commodity currencies found strength to soar against greenback, while yen and euro had come under pressure since early Europe.

EUR/USD quotes around 1.4080, unable to overcome 1.4120 static resistance area, that has been capping the upside since post data dip to 1.4030 daily low. USD/JPY has regained the 81.00 level, trading over the past few hours in between 81.00 and 81.30, far from yesterday’s high of 81.65 and immediate resistance level. Finally, USD/CHF holds barely below 0.9600, favored to the downside on SNB comments about needed rate hike in the short term, while GBP/USD remains range bound lacking strength either side of the board, although supported above 1.6200.



Forex: USD/JPY surges near daily high

Fri, Nov 5 2010, 16:06 GMT (Buenos Aires) – Dollar has accelerated higher across the board on London fix, favored by gold that’s falling below $ 1390/oz after setting a fresh record high at $ 1398/oz. Some profit taking at the end of the week plus position adjustment ahead of US data, are the main reason of current movements, after an eventful couple of hours that saw majors trading in tight ranges.

USD/JPY surged above 81.30, approaching to daily high at 81.46 set after better than expected US employment readings earlier today. Still limited to the upside by yesterday’s high around 81.65, pair has managed to slowly gain over this week, as the 80.30 15-year low posted past Monday, seems to have draw a bottom line, at least temporal. Still, market rumors suggest Japanese exports are ready to sell around the 82.00 level, while suspected stop losses lie above this one.

US stocks flat as 2-day rally begins to subside (Barcelona) - A widely upbeat US NFP report helped to bring Wall Street back into positive territory, however equities still struggle near even as wave of optimism originating from the Fed´s QE2 announcement begins to fade. So far the DOW and NASDAQ trade slightly under by 0.02% and 0.05%, while the S&P holds onto modest gains of 0.27%.

A day after the DOW closed at its highest level since September 2008, investors are striking a cautious tone as markets appear to be overextended. Still, the recently released US jobs report showed the economy added jobs over October for the first time in 5 months, helping to slightly lift confidence even though the unemployment rate remains at 9.6%.

Among stocks in focus, Kraft Foods is showing a loss of nearly 3.0% after announcing disappointing 3rd quarter results on higher costs. On the flipside, Starbucks and Coventry Health Care are up around 4.0% and 5.0% respectively as both firms post strong quarterly financials.

LME LATEST - Metals pare gains in PM sessions, but sentiment boost seen from US jobs data

Fri, Nov 5 2010, 16:37 GMT

- Base metals turned back from session highs during the PM sessions, with prices mixed but generally ending the week on a robust note. The bullish sentiment that has developed this week was underscored by today's US October non-farm payrolls report. This - the last of this week's key macro-events - came in much better than expected, with US employers adding 151,000 jobs last month compared with a forecast increase of some 60,000.

 - To some extent the complex was restrained by the firm dollar, which was ushered higher by the employment figures and was a firmer 1.4040 against the euro this afternoon. Some profit-taking in the metals after three days of hefty advances was also evident.

 - Copper was the exception, trading at $8,685 per tonne, still up $85 from Thursday, with volume around 14,500 lots. Earlier in Asia the market hit $8,769.50, its highest since July 2008, against a background of a large position being closed out. Prices are nevertheless getting ever nearer to the all-time high of $8,940 set that same month. Falling inventories - stocks are just 275 tonnes above their lowest for 12 months - and the start of a strike at the Collahuasi mine in Chile today mean that the impetus is upwards.

 - Aluminium business at $2,446 was $14 lower, with the market faltering after initially touching levels near the six-month high of $2,492 set yesterday. Resistance is anticipated around there - prices will be at levels last seen in September 2008.

(Editing by Mark Shaw)

US Pending Home Sales (MoM) declines 1.8% in September 

Fri, Nov 5 2010, 16:30 GMT (Barcelona) For more information, read our latest forex news.


Forex: EUR/USD could rise to 1.45 in the coming months – Danske Bank

Fri, Nov 5 2010, 18:28 GMT (Córdoba) – The Euro could extend its rally against the Dollar in the coming months according to analysts at the Danske Bank. The second round of quantitative easing by the FED and the exit strategy of the European Central combined will pushed the EUR/USD higher the bank affirm.

“The ECB remains committed to its exit strategy. Short money market rates in the eurozone remain elevated but can actually rise more if liquidity is being drained further. Hence, we maintain our call for a gradual dollar depreciation over the coming months and maintain our forecast of EUR/USD to reach 1.45 in three months and continue towards 1.50 on the 12- month horizon unless the monetary policy divergence between the Fed and the ECB abates”, analyst at the Danske Bank said.

Forex: AUD/USD weekly gains above 300 pips (Córdoba) – AUD/USD posted the biggest weekly gain since July and finished above parity for the first time since it’s freely traded. The pair rose more than 300 pips during the week supported by a rate hike in Australia, soaring gold prices and FED’s announcement of more quantitative easing.

“On a longer-term perspective, AUD/USD potentially carries enough of a bullish bias to target upside around the 1.0500 price region, which is a key 261.8% Fibonacci extension level. To the downside, parity now serves as significant support where it previously served as strong resistance before breakout”, said James Chen, chief technical analyst at FX Solutions.

AUD/JPY extended its rally on Friday and reached at 82.60, the highest price in 5 months. The pair accumulates an increase of 330 since Monday’s Asian session.

The Aussie and the New Zealand Dollar were the biggest gainers during the week among the most traded currencies. 

US GOLD - Comex gold pushes aside dollar rally to strike new record just below $1,400

Fri, Nov 5 2010, 20:11 GMT

New York 05/11/2010 - Gold on the Comex division of the New York Mercantile Exchange touched a fresh all-time high Friday and closed just shy of $1,400 an ounce as overall bullish sentiment outweighed a unexpectedly strong US jobs report, which led the dollar to rebound.
Gold futures for December delivery settled up $14.60 to $1,397.70 an ounce. Earlier in the session, the yellow metal hit a lifetime high of $1,398 for the most actively traded contract.
Comex silver also posted strong gains as the December contract touched a new 30-year high of $26.915 an ounce before closing up 71 cents at $26.748.
Precious metal prices are still being swayed by positive post-qunatitive easing (QE2) euphoria. On Wednesday, the Federal Reserve announced its intentions to buy an additional $600 billion in Treasury bonds in an attempt to pump some added life in the economy.
"Today was a continuation of what's been going on. It's all investment demand as people are trying to move out of paper assets because they're afraid that the central banks are going to crank up the printing presses," a US-based gold trader said.
The market even shrugged off a positive jobs report, which typically would have dented bullion prices.
The US Labor Department reported that the economy added 151,000 jobs in October, an improvement over September, when 41,000 jobs were lost, and much better than expectations of a 63,000 gain.
Based on that news, the dollar climbed about 1 percent against the euro to 1.4039 from 1.4215 on Thursday.
"New buying in gold and silver and their record highs led open interest figures to near records. Buyers were anxious enough to ignore the improving dollar and were intent on not missing the market," George Gero, senior vice president and financial consultant with RBC Wealth Management, said.
Gero added that QE2 appears to be working as the weak dollar is allowing foreign buyers to bargain hunt in the metals and agricultural markets.
MKS Finance SA said that the good numbers regarding the US labour market weren't enough to substantially alter the rally in gold, which started since the release of QE2.
"We're just a few steps away from the important $1,400 level which we expect to see very soon in the actual environment of concern over inflation and with the dollar under pressure boosting gold's appeal as a currency hedge," MKS said.
The first trader said that the gold will likely see some physiological resistance around $1,400, which is also a popular option strike price where people could be defending positions.
"It's always dangerous when you go into new high ground as this is a market tends to have some pretty large corrections; however, the last correction we had from $1,388 to $1,315 didn't really change the dynamics of the market or make it bearish," he said.
He added that if the sentiment does changes all at once there would be a big washout, but until that happens money will continue to pour in to metals.
"There are still folks out there who feel they missed the boat and are looking to get in. That's why we're seeing those dips get pretty good support," the trader said.

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