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  #81  
Old 17-05-2013, 07:54
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17 MAY 2013: USD STRENGTHENED BY FED STATEMENT

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


The dollar strengthened Friday morning and held firm against a basket of currencies, DXY, after a Federal Reserve (FED) official had indicated that FED may begin to taper its bond buying known as monetary easing already this summer. In a statement on Thursday the President of FED, in San Francisco, indicated that the Central Bank might ease back on the monetary gas pedal and end bond buying by the end of the year. His indications immediately led to a rise in the dollar with DXY up 0,4 % and nervousness in equity markets.

Analysts see a stronger dollar being prominent over the next months’ currency developments. The Euro/USD fell to 1.2860 and depreciation of the Japanese Yen continued. USD/JPY trades at 102,31. The dollar is likely to gain, particularly against low-yielding currencies such as Euro, Yen, GBP and Swiss Franc. In spite of conflicting macroeconomic signals from the US over the last few days, consensus among analysts seems to be that the US economy is holding up much better than that of the rest of the world. A strong US recovery strengthens the dollar lower yield currencies and gold.

There are, however, mixed signals. Numbers presented on Wednesday showed the US industrial production at its lowest level in 10 months. Data on Americans filing new jobless claims climbed last week at its fastest pace in six months, up 32,000 to a seasonal adjusted 360,000. The highest jump since November. The increased jobless claims came amidst signs of slower last quarter US-growth, due to the Federal government’s austerity drive with a hike in taxes in January and sweeping budget cuts in March.

The number of jobless claims stand in stark contradiction to last month’s 165 000 newly added jobs, and the drop in the unemployment rate to a four year low at 7,5 %. Stock markets were nervous yesterday. Wal-Mart, the world wide hypermarket store, presented quarterly earnings below Wall Street expectations. Stock prices fell 2 %. Good quarterly results from the technology sector and especially CISCO counterbalanced. The Asian Pacific MSCI-index fell 0,3 %.

Gold at USD 1379 is striving to keep above the four-week low on 1369 reached on Thursday. A Credit Suisse forecast predicts a 20 % fall in the price of gold during the next twelve months. Oil prices are steady with Bren trading at USD 103,64 a barrel.

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  #82  
Old 20-05-2013, 07:46
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20 MAY 2013: PRECIOUS METALS TUMBLE IN ASIA

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


Gold and Silver tumbled in early Asian trade. Silver dropped to the lowest level seen in years falling 4,31 % since Friday, Gold is trading at 1344 down 50 dollar an ounce since Friday. Precious metals have been under continuous pressure over the last few months. Gold fell 5,5 % during last week and the free fall accelerated this morning. Silver was, however, hit the hardest. Silver is trading at USD 21.35 an ounce, down one-and-a-half dollars since its high on Friday.


There is confusion in the precious metals markets. Gold bulls are claiming that some big bank and financial institutions are deliberately manipulating gold prices down, to buy back at lower levels when central banks aggressive money printing are going to hit the market with inflationary pressure. In such a situation, investors will again start buying gold and silver as a hedge and traditional safe haven.


The main reason for the fall in prices seem, however, to be that financial investors are liquidating,or strongly scaling down on their precious metals positions and turned into equities. The latest numbers from the US Securities and Exchange Commission demonstrate this development on the US SPDR GLD exchange. This statistics also shows that John Paulson,the billionaire hedge fund manager and the largest owner of shares in the GLD fund, maintains his positions.


Institutional selling of precious metals have been counter weighted by strong Asian buying of jewellery and coins, which have provided support for gold amid consistent selling by institutional investors. Precious metals in kind are selling USD 10 higher than “paper” gold. It is, however, a question of how long the physical buying of gold can last. Chinese demand rose 20 % in the first quarter boosted by an increase of 19 in jewellery and 22 percent in bar and coins. Indian demand increased similarly. Barclays Banks forecast is that gold shall average USD 1350 in the second quarter of 2013. Credit Suisse predicts a fall in gold prices to USD 1100 in a year’s time.


The USD clawed back and closed last week on its strongest level in three years against other currencies. Euro/USD trades at 1,2843 and USD/JPY 102,64. Australian and New Zealand dollars suffered heavier losses against the USD than their counterparts. The Australian dollar hit its lowest level in a year on Friday. Euro and GBP are also under strong downward pressure. Oil prices are steady with Brent trading at USD 104,50 a barrel.

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  #83  
Old 21-05-2013, 08:17
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21 MAY 2013: GOLD REBOUNDS AS USD WEAKENS

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


Gold and Silver rebounded strongly yesterday after the onslaught at the end of last week, and in Asia on Monday morning. Both the precious metals fell nearly 5 %. Gold trades at USD 1387 an ounce in Asia, 35 dollars up from the lows 24 hours ago. Silver trades at USD 22,70 rebounding from a low of 21.00 and reached USD 23, at the start of the Asian trading session. The cautious comments from representatives from the US Federal Reserve (FED) regarding the bond-buying stimulus, have weakened the USD.


In a statement on Monday, the President of the Federal Reserve in Chicago followed up last week’s comments from another regional FED president, that the bond-buying program might end abruptly in the autumn if, by then, the FED was sure that the labour market was on solid footing. Earlier, the FED put a 6,5 % unemployment statistic as the critical mark. The last published data showed a 7,6 % unemployment statistic. The aggressive monetary easing policies now also followed by Japan, has given global stock markets a strong boost.


US-stocks ended flat on Monday with indexes hovering near record levels. Concerns about a stop in bond-buying and a correction are influencing markets. Energy stocks and primarily solar companies soared. Dow Jones saw an intraday high at 15 391. S&P reached 1 672. Both indexes are up 17 % since January 1st. Investors are split between nervousness for a strong correction due to the sharpness and length of the rally, and those who are afraid to miss a continued rally.


European shares set a new five-year high for the fourth straight session on Monday, after positive indicators from The United States and Japan pointed to an improving global economic outlook. European blue chip stocks (Financial Times Eurofirst 300 index) was up one percent, which is the highest level seen since mid 2008. The positive US consumer sentiment data from Friday, the highest level seen in almost six years, is seen as especially encouraging. EasyJet and Ryan Air were among the biggest gainers.


The Japanese Yen tumbled yesterday after comments from its Minister of Economy, warning that the currency might have weakened enough. USD/JPY fell to 102 after Friday’s high on 103,22, but has rebounded to 102,22. Oil prices are keeping steady. Brent crude trades at USD 104,83 a barrel. FED Chairman Ben Bernanke’s statement to Congress on Wednesday will be crucial for the further development in currencies and global equity markets.

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  #84  
Old 22-05-2013, 07:13
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22 MAY 2013: BERNANKE HOLDS THE KEY TO THE STRENGTH OF THE USD

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


Global markets traded steadily yesterday building up to the publishing of the Federal Reserve’s minutes from the last BOD meeting in April/May, and Ben Bernanke’s statement to Congress later today. After a small correction on Tuesday, the USD continues to strengthen and is up close to record high against a basket of currencies, DXY.


As proven over the last few weeks, the overall trend in the USD is pointing up towards all currency pairs in spite of a day or two of declines. This trend is supported by three main factors; the forecast for the US is better than for any other economy, Europe is ridden with recession and Japan is concentrating its efforts on increasing the inflation to the 2 % target.


The upswing in the US economy is mainly due to its monetary easing and FED's loose monetary policies. FED representatives have, over the last few days, indicated that the bond buying program will soon come to an end. If Bernanke “sneezes” today and states the same as his local FED representatives have done, it would mean a further strengthening of the USD.


A weaker Euro and Yen over the last few hours seem to indicate that this is what markets expect. After the Japanese Economy minister talked the Yen up earlier in the week, he seems to have been reprimanded by superiors, and the Yen continues its free fall. The International Monetary Fund, IMF, in a report today, urged Swiss authorities to weaken the Franc by unwinding its currency reserve funds. The Franc has already depreciated 3,7 % towards the Euro in 2013.


Precious metals continue to fluctuate, wildly searching for direction. The large increases in gold and silver throughout Asia and early European trade was quickly eaten by new steep falls. Oil prices keep steady. Smaller than expected English inflation strengthened GBP and gave the markets hopes for loser monetary policies, meaning more money printed by the Bank of England.

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  #85  
Old 23-05-2013, 09:47
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23 MAY 2013: BERNANKE TAKES USD TO NEW HIGHS

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


The head of the federal Reserve, FED, Ben Bernanke’s statement to Congress caused markets to fluctuate wildly yesterday. Bernanke’s comments initially had a positive impact on the stock markets when he stated that it would have unpredictable consequences for the US economy if FED’s bond buying program was terminated in the near future.

The bond buying program has boosted the US and global stock markets, but has so far failed to create new employment. FED had earlier stated that the bond buying of USD 800 billion collar will end when the unemployment has reached 6,5 %. It now stands at 7,6 %. This statement was initially seen by markets as a continuation of the bond buying that has boosted global equity markets.

At the same time Bernanke indicated that the termination of the bond buying might be on the immediate cards.. These comments were supported by the minutes from the April/May FED board meeting opening for a termination of the bond buying within the near future. This resulted in a steep fall in US stock indexes. Dow Jones fell from 16 464 down to 15 307 with equal immediate drops in S&P and Nasdaq.

The USD jumped to 103,73 Yen a Dollar. The DXY, a basket of currencies against USD, raised to a record high of 84,27, Euro/USD jumped to 1.2854 as Swiss Franc weakened both towards Dollar and Euro. The Australian dollar trades at its lowest level in a year. Precious metals have fluctuated wildly through the New York session with gold trading between USD 1369 and 1416. Silver reached USD 23,20 to fall back to 22,27. Oil prices remain steady.

Bernanke’s statement boosted global stock markets. Dow Jones immediately increased to a record high of 15 464 with equal jumps in European equities.

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  #86  
Old 24-05-2013, 07:58
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24 MAY 2013: SERIOUS MELTDOWN IN GLOBAL EQUITIES

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


Dubious signals from the US Federal Reserve, FED, on continued monetary easing, and disappointing Chinese PMI numbers (a barometer on business leaders optimism), led to a serious meltdown in global equity markets yesterday. The Japanese Nikkei plunged 7,32 % with more modest losses in Europe, where London and Frankfurt indexes lost 2 %.

While FED’s Ben Bernanke testimony to Congress, warned against a premature end to the bond buying program, FED’s April minutes pointed to a split between those who want a quick termination of the program and those siding with Bernanke. Monetary easing has been the driving force behind the last months steep increases in equities.

It is natural to see the steep plunge in Japan as a result of a doubling in stock prices over the last half year and the latest aggressive stimulus policies. Globally, there have been increased worries among investors as to whether equity markets, running ahead of fundamentals, are creating a dangerous bubble. With news of an end to monetary easing and problems in China this created risk aversion and a sell off..

The fall in the US-indexes were modest following the onslaught in other markets. The last published jobless claims at 340,000, are 5000 fewer than expected. There is still a long shot to the 6,5 % unemployment target set by FED, but fewer jobless claims would give the proponents of an early end to the bond buying programs new arguments.

Oil prices which have kept surprisingly steady over the last month, decreased more than two dollars a barrel.

EUR/USD got support from higher than expected PMI indexes. As a result, EUR/USD from level of opening - 1,2855 was rolled away to a maximum of 1,2956 and this morning we can see pair traded on a level of 1.2932. GBP/USD behaved more frostily against volatility of both currency pairs and share indexes. Having reached quite strong support on 1,50 the previous trading day, pair showed moderate correction. The most important question of today is- whether the Yen finished it's decline? Taking into consideration all the factors, pair can quite roll down to the area of 100.00.

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  #87  
Old 27-05-2013, 07:18
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27 MAY 2013: INVESTORS LOSE OUT DUE TO BAD TIMING

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


Stocks took a breather last week after signs of cooling in China, and what some investors saw as a possible change in FED policies. The Nikkei, which has soared since last November on hopes of economic revival, was the hardest hit with Thursday’s 7,32 % fall. Other Asian and European markets dropped as well, but not so dramatically, raising questions whether the bull market has come to an end.


Some investors blame FED-chairman, Ben Bernanke for the turmoil. Others point to a seeming difference between Bernanke and the board’s published minutes for late April. Investors might, however, blame themselves for unrealistic expectations and their gamble on a change in FED’s policies.


Investors have different motives in their bet for a change. Some are appalled by FED’s money printing and that there is no predicted hyperinflation. Others hoped that Bernanke’s monetary experiments would be abandoned. Such abandonment would have meant that President Obama’s entire economic policy had failed. The third and biggest group of Wall Street investors simply blame themselves for missing out on the stock rally. The general indexes have beaten the hedge funds three times since January.


No wonder many of them are frustrated. Fat bonuses this year might hang on their own wishful thinking for a quick change. Change depends, however, on objective analysis, and a correct reading of Bernanke’s careful wording. In his testimony last week, Bernanke repeated word for word what he stated since last September.


FED will continue to buy 85 billion of bonds monthly till the 6,5 % target for unemployment and a steady growth is established. The US economy is not quite there yet. It might well take another 8 – 12 months. The grunting from dissatisfied FED board members is not something new.Their hopes for a change in policies have been reflected in the last eight FED minutes.


There will, of course, be a change. But the timing will be decided by economic data and FED’s consideration. Investors lost billions of dollars last week on a wrong bet on the timing for a change. By now, they have hopefully swallowed their anger and are ready to meet markets which are hopefully back on track, ready for rallies and continued new highs.

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  #88  
Old 28-05-2013, 09:17
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28 MAY 2013: JAPANESE STOCKS FALL AS YEN SOARS

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


The Japanese stock market continued to fall another 3,25 %, after Friday’s dramatic 7,32 % fall. The US dollar simultaneously witnessed its worst week against the JPY in one year, dropping from 103.50 to 101.09 Yen a Dollar on Friday.The Yen traded even lower yesterday, dipping below 101 at one point.

Western European equity markets have recovered from the downward shock at the end of last week. The French index jumped 0.97 % during yesterday’s trade, and Germany’s Frankfurt index added another 0.85 %. Nordic equities were strong while the British FYTSE lost 0.64 %. Developing markets also recovered with India jumping 2.47 %.

The Australian Dollar continues to fall, and trades just above 96 against the USD, on news that China has no intentions to stimulate growth at the expense of environment. The fall in the Chinese PMI last week had a further negative effect. Australia is dependent on coal export and Chinese growth. For Australia, its alarming that China is said to cut down on coal and encourage gas and solar energy to fight pollution.

The Euro/USD is strengthened and close to break through both the 21 and 50 days moving averages, helped by lower yields on Italian and Spanish bonds. The recent sharp downturn in USD/JPY is seen by analysts as a correction after huge amount of speculative Dollars gambled on a lower Yen. The strength of the yen is, however, temporary, and the weakness in the Japanese currency is bound to continue.

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  #89  
Old 29-05-2013, 03:36
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29 MAY 2013: USD RALLIES ON STRONG DATA

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


US Dollar rallied against the Euro and Japanese Yen on strong consumer confidence, home prices accelerating to the highest levels seen in seven years. EURO/USD fell to 1.2874 while USD/JPY plunged to 102.58. Dow Jones jumped 92 points to 15.395 while the technology index Nasdaq added 0.62 %. The yield on US 10 years treasuries, simultaneously, reached a one year high.

After three losing sessions, global equity markets performed strongly. The Japanese Nikkei were up 1.3 % on Tuesday after a two day dramatic 10 percent plunge. All the European stock exchanges rose, UK being the strongest, with a 1.83 % increase. English and US markets were closed on Monday due to Memorial Day.

The equity rally came as central bankers in Germany and Japan confirmed their willingness to continue monetary easing. A German member of the European Central Bank (ECB) stated that the loose monetary policies would last for as long as it takes to get the Western European economy back on track. A representative from Bank of Japan issued a similar statement.

These strong statements will probably encourage more risk taking in higher yield assets financed through so called carry trading; cheap loans in Japanese Yen. While increased consumer confidence and higher home prices strengthen the USD, looser ECB monetary policies will lead to a weaker EURO/USD. A fall below the long traded interval,1.28 – 1.32, seems likely.

Japanese Yen is probably going to fall further as the short lived Yen rally indicates. The weakness in the Yen is there to be continued. Currency analysts are predicting within three months 106 Yen to the Dollar, and expect a further plunge to 109 within six months. Bottom levels are as low as 120 – 125 Yen a Dollar and seem likely in 2014.

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  #90  
Old 30-05-2013, 07:50
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30 MAY 2013: JAPANESE NIKKEI INDEX IS AGAIN AN OUTSIDER.

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


After couple of days of moderate growth, the decrease at the Asian stock markets was resumed. Support to sellers is given by the Yen growth, though in the debt market - profitability of 10 year bonds, was a little far away from maximum levels previously reached. The reason for this, could be the speech from the chairman of the Central Bank, Haruhiko Kuroda, who declared intention to decrease volatility in the debt market, and also decrease interest rates by means of a monetary easing program in the long-term prospective. As a result, Japanese Nikkei lost -5.14% and USD/JPY decreased to 100.72 this morning.

The Eurozone prepared an unpleasant surprise yesterday- data on the labor market which showed growth of the number of the unemployed by 21 thousand against the expected 4 thousand. However, it couldn't roll EUR/USD, which, towards the end of the day,returned to the day’s maximum levels, having reached 1,2977 and having rolled away to 1,2940 by the close.

There are some statistics which could influence further development of the EUR/USD pair. We are not expecting any changes of GDP (Gross Domestic Product) of the USA, but the number of the unemployed who have submitted applications for receiving a grant, is interesting, especially in the light of Rosengren's statements yesterday from FRS, in which he noted that it is possible to reduce the volume of the buying up of bonds, if the indicators from the labor market and on the economy, will, in general, be stable for few more months. The lower the unemployment figures will be,the higher chances EUR/USD will have to return to testing of support on 1,2850.

Prices of oil following the results of the last trading session showed negative dynamics. Besides a noticeable decrease in the developed stock markets, deterioration of forecasts on the development of the economy of the two largest consumers of raw materials - the USA and the People's Republic of China, became one of negative factors. Also, according to yesterday's data from the American institute of oil (API) stocks of oil increased by 4,4 million barrels. As for gasoline, the volume of stocks grew by 1,94 million barrels. Today, price for Brent is 102,36$ and price for WTI is 92.87$.

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  #91  
Old 31-05-2013, 08:42
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31 MAY 2013: NEW RALLY IN CURRENCY MARKET – EURO PREVAILS OVER DOLLAR

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


All conditions were created for a rally of EUR/USD: reports from the Eurozone were better than forecast, and at the same time for the USA – worse than predicted. The result didn't keep itself waiting for long, the pair could go above the strong resistance level at 1.30, although it reached a maximum on 1.3061 and finished the trading session around 1.3040. It is quite interesting actually, that the data from the USA were not as dire as predicted, and the Eurozone in general was not presenting something really satisfying or exceptional. The conclusion comes by itself – the overbought USD gives power to the Euro.

So, GDP (Gross Domestic Product) of the USA in 1 quarter was reconsidered to fall from 2,5% to 2,4%, and the number of the unemployed who have submitted an application for receiving a grant, grew to 354 thousand. It is absolutely not enough to frighten Bernanke, but it is quite enough to provoke investors to close long positions on USD on tops. This also gave support to the British Pound and GBP/USD from the level of opening at 1.5129 pair reached a maximum of 1.5219, having finished the trading session around 1.52.

After disappointments with the labor market in Germany, today it is worth looking at the data on retails in the country. Usually there is direct correlation: there is no income – there are no expenses, however analysts predict the indicator’s growth, so tension in the market increases. If sales volumes will really increase, it will give additional support for further strengthening of EUR/USD to the next resistance levels on 1.3070 and 1.3110.

In relation to Japan today, it is worth acknowledging the statement of IMF (International Monetary Fund), in which it completely supported the current monetary policy of the country, and stated extensive prospects of its further realization. Furthermore, the problem with growth of profitability of state bonds is considered to be completely controllable. Asian stock markets started the day positively, however, by this time, buyers confidence had already evaporated. Japanese Nikkei slightly restores yesterday's losses, while the Hong Kong’s Hang Seng again looks worse than its"colleagues".

Prices for precious metals are stable, with Gold on 1417.08$ and Silver on 22.74$. Prices for oil are slightly down, with Brent on 102.07$ per barrel and WTI on 93.47$. Today the next meeting of representatives of member countries of OPEC becomes a key event of the day in the oil market. Questions on the current quotas of production, and also the increase in production of oil in the USA will be discussed. America now produces record volumes of oil, thereby reducing the dependence from former exporters.

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Old 04-06-2013, 07:07
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04 JUNE 2013: DOLLAR DROPS ON NEW DATA

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


The US Dollar suffered a serious setback and dropped to one-month lows against a basket of major currencies on Tuesday after the index on the US- manufacturing fell for the first time in six months. National factory activity sank to the lowest level seen since 2009.

The disappointing data curbed speculation that the Federal Reserve (FED) would scale back its stimulus anytime soon. The dollar index, against a basket of major currencies, DXY, fell one percent as the Japanese Yen strengthened. USD/JPY dipped below 100 for the first time in weeks at 99.70.

Long positions on USD are, therefore, likely to remain under pressure until Friday’s job reports. The unemployment numbers will have to beat the expected forecasts of 165,000 less unemployed significantly, to revive the upside momentum in the USD, analysts say.

The renewed pressure on the dollar saw the Euro/USD above the 1.31 level for the first time since May the 9th. The Euro has fallen back to 1.3063 in the early Asian trading session. USD/JPY fell as low as 98,86 and has lost 4.5 %, 4 % from the high on 103,74 set last month. The dollar’s fall against other currencies, which had lately lost ground against the dollar, was even more dramatic. The Australian dollar rallied more than 2% close to parity with the USD at 99.92.

The US data led to a turnaround in Asian stocks which recovered from their lowest levels in half a year. The Japanese Nikkei has fallen as much as 15% over the last two weeks. The American indexes fell due to the disappointing manufacturing data. Oil and gold prices are steady compared to yesterday. Gold is at USD 1411 an ounce and Brent crude trades at USD 101,89 a barrel.

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Old 05-06-2013, 07:29
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05 JUNE 2013: US AND ASIAN STOCKS DECLINE ON FED UNCERTAINTY

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


Asian stocks slipped to their lowest level in 2013 as uncertainty over when the US Federal Reserve (FED) would begin scaling down its massive stimulus program. Siince 2008, FED has injected 2,5 trillion dollars into bonds to boost the economy. The increased liquidity has mainly benefited US-stocks which have reached new highs, but also led to an inflow of US-funds into Asian and other markets. There are now increased worries, especially in Asia, about funds flowing out of the region.

Over the past few days, this trend has been reflected in a stronger Japanese Yen (JPY). Foreign funds have, for the last few months, been injected into a rapidly increasing and profitable Japanese stock market. Foreign capital is now taking profit and selling Yen with the effect that the JPY has increased 4 % in the last few days in relation to USD. USD/JPY fell below 100 on Monday, recovered early during Wednesday’s session, but later dipped back to 99.2 Yen to a Dollar.

US stocks ended even lower on Tuesday, resuming their recent decline, as investors sold growth-oriented sectors on speculation the Federal Reserve may slow down the pace of its economic stimulus. The indexes have fallen 2 percent from their peak on May 22nd as investors take profit. Dow Jones was down 0.50 % at 15 177. A top US-official, critical to the bond buying program, stated yesterday that FED is poised to re-evaluate and possibly make changes to its massive monetary stimulus.

FED Chairman, Ben Bernanke, has been consistent in his comments on monetary easing and stressed that proof of a real turnaround in US economy reflected in an unemployment target of 6,5, which is necessary before making changes. After the disappointing manufacturing data earlier this week, the jobless claims presented on Friday might prove decisive for whether the stimulus program is going to be continued until the end of the year.

The Dollar recovered from an early-week selloff on Wednesday while the Australian Dollar plunged to a 19 month low on the back of disappointing growth data. Euro/USD is at 1.3086 back from a one-month high on 1.3108.There is strong technical resistance at 1.3141. Oil prices are up. NYMEX is at 93,63 and Brent crude trades above USD 103 a barrel.

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Old 06-06-2013, 06:29
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06 JUNE 2013: YEN JUMPS AS WALL STREET FALLS

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


The Yen rose sharply early Thursday. USD/JPY dropped to 99.00, up more than one percent since yesterday. Commodity currencies are under strong pressure with the Australian Dollar at a 19-month low. The currency volatility follows a steep fall in US stocks Wednesday extending the previous days sell-off. Dow Jones dipped under 15.000 due to concerns that the US Federal Reserve, FED, may scale down its bond-buying stimulus when the economy is still sluggish.

The sell-off on Wall Street was broadly based with four decliners to one advancing stock. The selling might suggest that the seven-month stock rally is coming to an end. The S&P 500 has fallen 3.6 percent since its peak on May the 21st, one day before Ben Bernanke indicated that FED might taper its stimulus if economic data shows traction. The jobless numbers and unemployment statistics to be presented tomorrow are therefore crucial.

Both Dow Jones and Nasdaq registered their biggest percentage drops in six weeks. Most Asian markets suffered similar falls and slipped to fresh lows. Economic data has recently been mixed. Investors fear that FED will reduce their monetary easing before the economy is back on track, in spite of clear FED statements that the stimulus will continue until unemployment is reduced to 6.5 %. A report yesterday showed that private employers created far less jobs in May than the 160,000 predicted. The figures are a strong argument against changes.

The long term bullish outlook on the USD/JPY remains. Analysts don’t predict steeper falls from here and still see 120 as likely in 6 – 12 months. EUR/USD is resilient, reaching 1.3118 yesterday before falling back to 1.3095. The stronger Euro comes ahead of ECBs policy meeting. ECB will probably consider whether it is necessary to take fresh action in order to secure the expected recovery of the euro zone in the second half of 2013.

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  #95  
Old 07-06-2013, 06:26
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07 JUNE 2013: DOLLAR PLUNGES IN BROAD SELL-OFF

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


The Dollar plunged against the Euro, Japanese Yen, and other currencies as investors reduced bets on the greenback on concerns that today’s US jobs report will disappoint. Euro/USD trades at 1.3262. American stocks fell in tandem with a weaker USD, but rebounded to end in positive territory. Dow Jones added 0.53 % to climb back above the 15.000 level. Nasdaq gained 0.66 % to 3 424. The changes seem to be technically driven by psychological factors.

A poll amongst economists expects 170 000 new jobs could've been added to the US economy in May with an unemployment rate of 7.5 %. Fear of a weaker than expected job report prompted, however, investors to unwind bets on a stronger Dollar that had been profitable for months. Gold prices, which have been under strong pressure for months, suddenly rose 1 percent to USD 1412 an ounce as investors sold long positions on the Dollar.

The Euro gained after the European Central Bank, ECB, left interest rates unchanged. ECB President, Mario Draghi, stated that further monetary support was unlikely in the near future. ECB has kept interest rates at a record low of 0,5 % waiting for a turnaround in the Euro zone. Bank of England have also chosen to leave their loose monetary policy unchanged. British Sterling, GBP, has jumped against the Dollar at 1,5612 and gained substantially during the last few days from low 1.51 levels.

Concerns that key US job data will disappoint sent the Japanese Nikkei into bear territory in Asia this morning. The Nikkei plunged 1.9 % to a two month low. Nikkei has lost 20 % from a five-and-half-year high, just two weeks ago. Other Asian stocks failed to capitalize on overnight gains in Wall Street. The Asian Pacific MSCI-index fell 0.6 % to its lowest level since November. The fall in equities seem to indicate a stronger appetite among investors for safe haven bonds. The yield on U.S, German and Japanese bonds have risen recently.

Oil prices are higher on the back of a weaker Dollar. Brent crude trades close to USD 104 a barrel, up from the USD 100 mark earlier in the week.

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  #96  
Old 10-06-2013, 09:12
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10 JUNE 2013: US JOB DATA CALMS EQUITIES

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


Global equities pushed higher and the dollar steadied with the release of the US employment report for May. The Dow Jones shot up more than 200 points scoring its best day since January 2, and the S&P 500 ended a two week losing streak on Friday after an extremely volatile week with big price fluctuations in currencies and equities. The job data was in line with expectations. 175,000 more jobs were added. The unemployment rate increased from 7,5 to 7,6 %.

Japanese shares rebounded strongly on Monday spawning worries about near-term tapering of US Federal Reserve, FED, stimulus and weak Chinese data. The job data didn’t suggest an imminent tapering, but coming US economic data shall be followed closely. Retail sales later this week will be a new indicator. The Asian Pacific MSCI-index which lost 1,1 % on Friday, was slightly up in early trading.

USD extended its gains against JPY at 98,22 after briefly falling below 95 on Friday. The weaker Yen contributed to a doubling of Japan’s current account surplus in April, compared to 2012. Bank lending posted its biggest annual rise in three years. The third biggest economy grew 1,0 % in the first quarter of 2013, underscoring steady recovery driven by a pickup in global growth and the sweeping stimulus policies of Shinzo Abe’s government.

The Dollar index, DXY, added 0,2 % to 81.880 after plunging to a three- month low on Thursday. The Euro is also stronger against the Yen. Euro/USD dipped below 1.32 at 1.3193 after a strong performance on Friday, following heavy selling of long Dollar positions. The Australian Dollar slumped to USD 0.9411 after disappointing data from China, which is Australia’s biggest export market. The Chinese economy grew at its slowest pace for 13 years. Oil prices are steady with Brent above USD 104 a barrel. Gold is at USD 1385.

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Old 11-06-2013, 08:12
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11 JUNE 2013: USD SLIPS AGAINST YEN AND EURO

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


The Bank of Japan (BOJ) did not intervene in the volatile bond market and kept monetary policy steady at yesterday’s meeting. The decision strengthened the Yen. USD/JPY trades at 98.42 EURO/USD, which started the week at 1.3193 and has climbed 80 points to 1.3272. The Dollar, which hit a 4-1/2-year peak against the Yen of 103.74 last month, has since fallen.

Asian stocks sagged to a fresh 2013 low due to the Chinese growth worries and continued uncertainty over US monetary easing and its bond buying program. The Nikkei N225 ended 0.7 % down, while USD/JPY declined 0.4 %. The South Pacific MSCI-index shed 0.9 % and fell for the fifth straight day in a row. In New York, Dow Jones ended slightly down at 15. 238. Nasdaq was in positive territory, 0.13 %, after a 1.71 % gain for Intel, which was the winner of the day.

The international rating agency, Standard & Poor’s, raised the US economic outlook to stable from negative, from the positive jobs data presented last Friday. The upgrade will contribute towards keeping the speculation about an eventual softening of FED’s strong commitment to quantitative easing alive. Both global equity and commodity markets have recently been jolted by FED stimulus concerns, slowing growth in China, contributing towards the continued recession in Europe and big turbulence in the Japanese stock and bond markets.

This volatility clearly demonstrates the weaknesses of monetary easing. It boosts liquidity and exacerbates moves in the financial markets without having a real impact on the real economy. Abenomics led to a strong stock rally and a steep fall in the Yen. Over the last two weeks Nikkei has lost 20 % and USD/JPY is up 5 % . Most analytics continue to be bullish on USD and stress that long-term capital flows are moving into US corporate bonds. This will strengthen the USD.

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Old 12-06-2013, 07:34
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12 JUNE 2013: USD/JPY REBOUNDS AFTER STEEP FALL

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


The Dollar steadied against the Yen on Wednesday, suffering its biggest drop in three years yesterday. USD/JPY trades at 96.44, sinking as low as 95.60 in the previous session. The 2.7 % fall marked the biggest one-day drop in the USD/JPY currency since May 2010. The Dollar continued to slip against the Euro at 1.3307. The Dollar index DXY steadied after slumping to a four-month low of 81.034. The weakened Australian Dollar gained 0.4% and trades 0.9469 to a USD.

Bank of Japan (BOJ) disappointed investors hoping for an extension in the maximum duration of its fixed-rate loans, similar to the European Central Bank (ECB) long term financing operation. Such extension would have been aimed at quelling the volatility in the bond market. The market expected such a move. When that did not happen, the Yen sellers had to liquidate short positions. Yen buying was strengthened by exporters shrinking purchases of the Dollar.

The volatility and tumult in the Japanese bond market have raised worries that it could undercut the Abe government and BOJ’s efforts of monetary easing. USD/JPY had, until the recent turnaround, fallen continuously from 80 to 103.65 Yen to a Dollar. The weaker Yen gave Japanese export a welcomed boost, but most of this advantage has been eaten by the stronger Yen experienced in June.

The US and European stock markets tumbled yesterday on nervousness over FED’s monetary easing exit strategy. Dow Jones and Nasdaq fell from 0.76 to 1.06 %. At the General Assembly of Facebook, CEO, Mark Zuckerberg, faced a barrage of questions about the stock price. Facebook’s shares have fallen 37% since its introduction. In Japan, the Nikkei index fell below 13.000 as the strong Yen dragged exporters down.

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Old 13-06-2013, 07:19
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13 JUNE 2013: ASIAN MARKET PLUNGES WITH STRONGER YEN

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


The Dollar plunged to its lowest level in ten weeks against JPY at 94.81, while the Asian stock markets experienced one of its worst one day down falls. All the Asian markets ended in red territory with the Japanese Nikkei 500 index falling as much as 5.3 %. Tumbling Japanese shares accelerated the fall of the Dollar as Nikkei- investors continued to unwind earlier hedges against a weaker Yen. The Dollar has lost 8.6 % since hitting a four year high of 103,74 on May 22.

The latest developments demonstrate the gamble involved in Central Bank’s monetary easing. Investors have snapped up Japanese shares between mid-November and May, as a weaker Yen promised to fatten exporter’s overseas revenues. Now a stronger Yen threatens to do the opposite, leading to further sell-offs in the Nikkei. The tumults in Asia come on top of uncertainty about whether the US Federal Reserve (FED) will pare back its stimulus program buying bonds and treasury bills. Japanese bond selling is adding to the pressure on the currency.

The fall in Asian shares followed a weak session in New York. Dow Jones Industrial was down 0.84 % while the technology heavy Nasdaq lost 1.06. The Dollar lost 0.3 % against a basket of currencies, DXY, ending at 80.741 after falling below 80.651, a level not seen since February. The Dollar has lost 4 % since its three-year high on May 25th. Adjustments in overextended long USD positions rather than a changing perception of US growth and Fed outlook, seems to be behind the weaker Dollar.

Weakness in the Dollar saw the Euro climb to a near four-month high of 1.3370. Euro/USD trades now at 1.3356. It is difficult to explain the stronger Euro, the recession in the Euro zone taken into account. Recent polls show, however, that a majority of analysts believe that ECB will keep the interest rate at the present level. Optimists are also suggesting that the euro zone will return to modest growth later this year.

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  #100  
Old 14-06-2013, 06:46
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14 JUNE 2013: ROBUST US-DATA TURNS MARKETS UP

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


Robust US retail sales and a drop in the weekly jobless benefits claims had a positive impact on global stock markets yesterday and this morning. . Japan’s Nikkei jumped 1.9 % recovering some of the sharp losses the last two weeks. This followed a strong session in New York. Dow Jones passed the 15 000 mark again, adding 1.21 %. The technology heavy Nasdaq index gained 1.32 %. The Asian Pacific MSCI-index rose 1.4 %. Also Chinese shares recovered.

Volatility is still high in the currency markets. Better than expected economic data calmed global markets,after the last few days bruising sell off. Investors remained, however, nervous ahead of next week’s Federal Reserve, FED, policy meeting on June the 18th-19th. The Dollar lost at one point more than 1% from early gains against the Yen, and stands at a four-month low against a basket of major currencies, DXY. USD/JPY is hovering below 95 at 94.92 Yen to a Dollar. Euro/USD is at 1.3349.

The positive data yesterday appeared to have brought some temporary relief to markets rocked by speculation on whether FED is going to taper its monetary easing. The strong rally in global equity markets over the last half year, has been driven by FED’s bond buying scheme. There is an open question as to how the stock markets would be affected by a discontinuation in monetary easing, which other central banks have also copied. Currencies are most likely going to continue to be volatile until stability returns to equities.

Yen short and Dollar long positions have been built up to excessive levels over the last few weeks, and have contributed to the volatility in USD/JPY. Selling of the Yen was overdone and it seems that the latest market turbulence might have filtered out much of that excess. USD/JPY at 95 seems to be reasonable for now. The British Pound Sterling, GBP, is gaining ground against the USD, trading above 1.57. Oil prices are up on US- growth expectations triggered by the latest data. US crude futures stand at 96.70 and Brent trades at USD 104.73 a barrel.

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  #101  
Old 17-06-2013, 06:20
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17 JUNE 2013: DOLLAR LOSES MOMENTUM

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


The Japanese Yen held near a two-month high against the Dollar and the Euro in early Asian trade Monday, amid market hysteria and confusion over when and how the US Federal Reserve (FED) will begin to scale down its massive stimulus program. USD/JPY opened at the same level as it ended in New York on Friday, where the Dollar bought 94.23 Yen. Since the opening, Yen has weakened to 94.77. EUR/USD trades steady at 1.3322 as French President Holland’s Socialist party asks for a weaker Euro.

The Dollar lost momentum during volatile sessions last week, which saw sharp moves in the Yen and emerging market currencies. Stronger retail sales and lower weekly jobless claims released last Thursday, helped the green back rise from months of lows. Negative consumer confidence figures published on Friday effected, however, USD negatively. The Dollar index, weighed against a basket of currencies, are at a four month low. Both Euro and GBP are at their strongest level against the Dollar since February.

Oil prices rallied to a two month high after Washington’s announcement that it would provide arms to Syrian rebel groups. New York Crude, NYMEX, trades at USD 97.63 a barrel and Brent is above 105. The Syrian crisis going to be at the top of the agenda when the G-8 meets today. The Syrian civil war is threatening the stability in neighboring Countries such as Jordan, Iraq, Lebanon and Turkey, and challenges Israel’s security as well. The conflict threatens to develop into a regional Russia/US proxy war also directly involving Iran.

In a price analysis Barclay’s bank is forecasting crude oil prices to retrace to USD 111 a barrel, taking supply shortfalls as well as geopolitical tensions into consideration. The Bank estimates supply shortfalls from OPEC (Organization of Oil Producing Countries) to be 2 million barrels a day or equal to Germany’s oil imports. Libyan oil output has fallen below 1m barrels a day due to protests at oil fields and terminals. Nigeria’s output has fallen due to theft-related damage to pipelines.

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  #102  
Old 18-06-2013, 07:27
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18 JUNE 2013: ASIAN SHARES SLIDE BEFORE FED MEETING

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


After a strong session in New York on Monday where Dow Jones, S&P, and Nasdaq all gained, Asian shares slide, as investors are nervously waiting news from the US Federal Reserve meeting and Bernanke’s news conference on Wednesday. The Japanese Nikkei and the Asian Pacific MSCI-indexes fell as did Australian shares which lost 0.9 %. The currencies are relatively steady with the EUR/USD at 1.3354 and USD/JPY at 94.84.

Oil prices continue to trade higher due to tension in the Middle East. Brent crude stands at USD 105.57 a barrel. The G-8 meeting amongst the world’s strongest developed economies, started their meeting in Northern Ireland yesterday, seeing Russia increasingly isolated in their support to the Assad-regime in Syria. US and European leaders simultaneously launched talks on the world’s most ambitious free trade agreements.

Markets are looking for the FED to clarify its outlook on its massive stimulus program when the US central bank concludes its two-day policy meeting on Wednesday. FEDs aggressive bond-buying program, along with other central banks accommodating monetary policies to promote growth, have provided liquidity which have been invested into higher risk assets as shares. Even modest tapering in monetary policies might, therefore, have had direct and unforeseen impact on the stock rally seen the last half-year.

Uncertainty over FEDs thinking has recently weighed in on the Dollar which has plunged to a four-month low towards a basket of currencies. The Dollar’s fall against the Yen has primarily been linked to speculators and investors cutting down on their Yen short positions after the Bank of Japan last week did nothing to quell a highly volatile domestic bond market. The fall in the Yen was sparked by a sell-off in Nikkei shares which have fallen 20 % from their peak at the end of May.

It is expected that FED, after its Wednesday meeting, will stress its commitment to continued stimulus and that any tapering will not signal lightening liquidity. At the G-8 meeting the Euro zone came under pressure to press on with a banking union. Japan was urged to follow up on central bank stimulus with structural reforms to tackle its budget deficits.

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  #103  
Old 19-06-2013, 07:22
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19 JUNE 2013: MARKETS WAIT FOR BERNANKE

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


Stocks led by General Electric grew higher on Wall Street yesterday, as markets eagerly wait for US Federal Reserve’s , FED, policy statement to be published later today. Both Dow Jones Industrial and the technology heavy Nasdaq added 0.91 and 0.87 % respectively on expectations that FED, for now, will maintain its aggressive bond buying program, which over the last half year has boosted stocks. Markets are gambling on continued monetary easing in spite of recent data pointing to an improvement in the US-economy.

FED Chairman Ben Bernanke recently stated that the bond buying would be wound down when the economy has proven stronger. FED has put a 6.5 % unemployment rate and an inflation rate below 2.5 % as benchmark targets. An improving US economy seems, at present, capable of growing without monetary easing, but FED has not yet decided on the final exit strategy. It is expected that a tapering of the bond buying will begin in September/October.

Japanese stocks followed the positive lead from New York, outperforming the rest of Asia. Nikkei rose 1.1 %, helped by a softer Yen. USD/JPY traded at 95.28 down from the 94.50 level seen over the last couple of days. The Asian Pacific MSCI-index eased 0.3 % led by a 1.3 % fall in mainland Chinese stocks. Hong Kong and South Koreas were also lower. The MSCI index has lost 8 % since May 22nd, when Bernanke indicated to Congress that a decision to wind down bond buying would come in the next few meetings.

The question for many investors is whether Bernanke will succeed in convincing markets that any tapering is conditional on incoming data opposed to the foregone conclusion: tapering is going to come regardless. The uncertainty has convinced most currency and equity investors to retreat to the sidelines. The Dollar has moved marginally over the last day. EUR/USD trades at 1.3390 after reaching close to a four-month peak at 1.3416 yesterday. Commodities, oil and gold are trading at steady levels.

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  #104  
Old 20-06-2013, 07:13
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20 JUNE 2013: FED STRENGTHENS USD WHILE STOCKS PLUNGE

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


The US Federal Reserve (FED) will start to taper its monetary easing program in the second half of 2013 ,and terminate the bond buying completely in the first half of 2014. That was Chairman Ben Bernanke’s message after FED’s meeting yesterday. A termination depends, however, on continued growth, controlled inflation and achievement of FED’s 6.5 % unemployment target. The US economy is moderately growing, but FED see increased downturn risks due to budget cuts, which have weakened growth. The low interest rate policies will continue.

Markets reacted by sending stocks down. Dow Jones Industrial fell 1.35 %. Nasdaq lost 1.12 %. The Asian indexes plunged on the news. The bond buying program has been the main driver behind this year’s stock rally. A termination invites uncertainty. The Asian-Pacific MSCI-index fell more than 3 %. The Japanese Nikkei was equally hard hit as were Australia, New Zealand and other Asian markets. The downturn in equity markets is most probably going to continue in Europe today.

FED’s conclusion and Bernanke’s comments don’t come as a big surprise. Over the last few weeks there has been continuous speculation as to when tapering would start. FED seems to be convinced that the US economy is on the right track, but keeps the door open for continued stimulus policies in the worst case scenario. This “exit” from monetary easing shall hardly calm nervous markets which usually overreact to news regarded as negative.

FED’s decision has strengthened the Dollar in relation to all currencies. EUR/USD has fallen from the 1.34 level to 1.326. Yen has also lost ground and trades at 96.28 Yen to a Dollar. USD/GDP, which lately has traded at around 1.57, plunged to 1.5448. The USD/AUD continues to fall, 0.9250, on new data confirming a slower Chinese growth. Oil prices are down. Brent crude trades at USD 104.69 a barrel, down one-and-a-half Dollars. Gold and commodity prices continue to lose ground.

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  #105  
Old 21-06-2013, 06:49
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21 JUNE 2013: MARKET COLLAPSE FOLLOWING FED STATEMENT

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


The collapse in global equity markets continue. FED’s statement on Wednesday to scale down economic stimulus and terminate the bond-buying program in 2014, has created panic and fear. The fear index reached the peak for the year. In New York the stock exchanges tumbled. The last two months profits were wiped out in two sessions. Dow Jones fell 2.34 % to 14.758 after the European markets were hard hit earlier in the day. In Asia, markets continue to fall dramatically.

Precious metals and developing countries’ currencies were especially hard hit. Gold prices fell more than 100 Dollars and reached levels unseen in years. Silver was even harder hit and fell 10% in two days trading below USD 20 an ounce. Oil prices quoted in USD fell 2.7 % partly as a result of a stronger Dollar. Brent crude has fallen four Dollars and trades at USD 102 a barrel. Other commodities such as copper, drive further down. Market sentiment is confused and bewildered in the wake of FED’s conditional statement.

FED’s program of bond-buying has fueled stock market gains since last autumn and created a strong rally taking indexes to new all-time highs. Investors have,for months, been buying on market dips, and limited stocks decline. It is a big question whether this pattern will continue. The money now leaving the equity market seems to be convinced that the past months rally has been artificially created mainly by FED, and consider whether the collapse represents a buying opportunity or a continued trend.

China’s higher funding Inter bank costs are adding to market’s nervousness in a situation where the Chinese economy is slowing. Chinese stocks dropped 2.8 %. An eventual end to the super-easy US monetary policy have raised concerns that a higher US interest rate will prompt a mass migration out of emerging markets. The Dollar has weakened somewhat against a basket of currencies after its big gains on Thursday. EUR/USD trades at 1.3229 and USD/JPY at 97.66.

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Old 24-06-2013, 07:49
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24 JUNE 2013: FED HAS INVESTORS RUNNING FOR COVER

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


Equities and government bonds came under fresh pressure at the end of last week .This development continues this morning where Asian shares fell to a 9-and-a-half month low, as investors worried about China's economic and financial stability simultaneously try to adjust to the prospect of diminishing Federal Reserve support. The Asian Pacific MSCI-index slipped to its lowest level since last September, posting a drop of 4.5 % only last week. US indexes suffered its biggest weekly decline in one year.

Global markets are fragile with dramatic falls for securities with emerging markets hit especially hard. The US Federal Reserve’s (FED) statement on Wednesday of last week, highlights what little tolerance there is to a shift in policy. In addition to the steep fall in equities, US government bond prices suffered. Yield on 10-year Treasury rose 8 basis points to 2.5 %, the highest level seen since 2011. German Bond yield rose on Friday to 1.73 % after FED Chairman Ben Bernanke stated that FED was preparing for a scale back – or “taper” – its monthly asset buying of USD 85 billion a month and terminate this program in the first half of 2014.

The latest rise in treasury yields added impetus to the Dollar which was the big winner last week. EUR/USD continues to fall and trades at 1.3109 in early Asian trade with USD/JPY at 97.66. In China, money mark rates remained volatile keeping investors in a jittery state about Chinese authorities intentions. The recent spike in market rates compounds fears of a sharper than expected slowdown in the Chinese economy. Chinese shares led by the banks continue their downward spiral.

Commodities, with precious metals in particular, were hardest hit by the market volatility. Gold returned to 2010 levels after dropping below USD 1300, trading at 1285. Gold is now more than 30 % below the nominal all-time high of USD 1921. Silver prices fell 8.5 % below USD 20 an ounce. The Euro lost 1.7 % in relation to dollar last week. Euro short positions were, however, aggressively cut, suggesting that traders expect a quick correction. The steep fall seen in the Australian Dollar, which, since March, has lost 17 % against the common currency, might also indicate a rebound.

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Old 25-06-2013, 08:37
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25 JUNE 2013: DOLLAR STRENGTHENS WITH SHARES FALLING

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


Global stocks continued to fall steeply on Monday after the trading week started with new lack luster sessions in Asia. Shares declined heavily in Europe and Dow Jones Industrial lost 0.94% adding to the 2% fall last week. Materials, industrials and financial stocks led by Bank of America ended in deep red, negative territory.

The technology heavy Nasdaq declined 1.04%. Equity markets regained some ground in the last half of the session, but the onslaught on stocks seems to be by no way over. Most of the gains after the last half years stock rally have been wiped out after the US Federal Reserve, FED, last Wednesday announced an end to the FED bond buying program of USD 85 billion monthly.

This monetary easing program has given stock markets added liquidity and taken them to new record highs. Capital has been pumped into the more risky emerging markets, which also have seen successful bond issues by in weak economies as Rwanda and Honduras. FED’s announcement has created panic like reactions and led to a flow of capital out of emerging markets and big declines in their currencies.

The last four days developments have grossly strengthened the USD. The DXY-index, a basket of currencies weighed against the Dollar, is at its highest level since June last year. A more optimistic business outlook from Germany has kept EUR/USD steady above 1.31. A decline below 1.3072 will, however, imply a strong bearish signal.

USD/JPY has also kept steady over the last 24 hours trading just below 98 Yen to a Dollar. The Australian Dollar has recovered 0.5% from the 33 month low following the bad financial news from China yesterday morning. The Aussie Dollar is extremely volatile to any changes in China. Precious metals continue to be under strong pressure set for new lows. The same goes for oil in spite of the tense situation in the Middle East.

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  #108  
Old 26-06-2013, 07:50
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26 JUNE 2013: US DATA LIFTS STOCKS

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


Strong manufacturing and housing data lifted the US equity markets after several losing sessions following the meeting in the Federal Reserve (FED) and Chairman Ben Bernanke’s statement last Wednesday. Global markets have since been in turmoil on the prospect of a tapering in the USD 85 billion monthly bond buying program, which have fed stocks with liquidity and created what many see as an artificial rally. Uncertainty as to whether monetary easing will continue, has in two weeks wiped out most of these gains.

The economic data presented yesterday gave strong arguments to those arguing that the US economy is back on the right track and the 6.5% unemployment target set by FED, is within reach. Realizing the heavy waves last week’s statement has created, FED representatives were, on Wednesday, eagerly playing down the likelihood for a quick end to monetary easing, stressing the many uncertainties and FED’s conditions for a termination.

These efforts were, to a certain degree, undermined by better than seven years housing figures. Greater demands for capital goods such as cars and aircrafts point in the same direction. The positive numbers had Dow Jones turn sharply up after four dismal losing sessions. Dow ended 0.65 % up at 14 754, still far from the benchmark 15 000. Nasdaq also gained ground and added 0.5 %. The European markets ended in positive territory after big losses since last week.

The Dollar is the big winner of the FED statement. It gained new ground after the housing data was published, but fell somewhat back. EUR/USD which started on a good note on 1.3235 dipped at a point below the resistance level on 1.3172 which represents the last 200 days moving average. A fall below that level will indicate that the EURO is in bullish territory. EURO fell as deep as 1.3162, but has since recovered well above 1301,72 to 1.3091.

The USD/JPY followed a similar trading pattern and stands 97.90. Australian Dollar rebounded strongly while the Chinese Central Bank’s tighter credit conditions towards private lenders conducting a freewheeling policy, sent new shivers through the Chinese stock markets. The losses were, at one point, 5.5 %, but turned back to a relatively modest 0,2 %. While the US economy seems to improve fundamentally, there are big question marks around the world’s second biggest economy . Oil and commodity prices have risen on the back of the new positive data in US.

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  #109  
Old 27-06-2013, 07:16
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27 JUNE 2013: WEAKER US- GDP LEADS TO STOCK RALLY

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


The stock rally in the US continued for a second day yesterday with all the three indexes in positive territory. Dow Jones Industrial jumped 1.02% and Nasdaq added 0.85% after GDP numbers for first quarter results were revised strongly down. Real GDP growth was 2.6 % and not the 3.4 % originally announced. The biggest revision was in consumption figures which had created strong turnaround expectations. When the market realized that these negative figures might lead to prolonged monetary easing, bad news suddenly turned into good.

The European stock market also demonstrated strength with all major indexes gaining ground with Paris the winner, jumping 2.09 % followed by Germany’s 1.66. Stocks in England and Scandinavia were among other winners. The Chairman of the European Central Bank, ECB, Mario Draghi’s, contributed to the good sentiment. In a statement he stressed that ECB will continue with its accommodating monetary policies. This was interpreted as ECB will continue to buy bonds in weaker EURO zone countries if needed.

Global markets saw precious metals fall to their lowest levels in 3 years. Gold plunged a new USD 43 to USD 1230 an ounce. Gold analysts predict that the 12000 mark set on the downside is, too, optimistic. A fall to USD 1000 seems more likely now. Silver is following the same pattern and fell yesterday from 19.80 to USD 18.65 an ounce. Oil prices are staying up relatively well with Brent crude trading above USD 101 a barrel.

The American Dollar has also been the winner during the last 24 hours trading. The DXY, a basket of currencies weighed against the Dollar, reached its highest level in 3 weeks. EUR/USD is under renewed pressure struggling to stay above the 130 level; after plunging through the critical 120 day moving average of 1.3062. The Euro shows all signs to have fallen in a bearish territory. USD/JPY trades steady at 97.80 after the fear for a banking crisis in China seems to be over for now.

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Old 28-06-2013, 07:58
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28 JUNE 2013: STOCK RALLY CONTINUES ON LUKEWARM GROWTH

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


Lower than expected consumer spending; only 9000 fewer unemployed applicants for benefits last week, point together to a more lukewarm growth in the United States. The numbers published today confirm the impression created by the downgrading yesterday, when US growth was from 3.4 % and adjusted to 2.6 % in the first quarter. Major banks as Berkley, Goldman Sachs and Morgan Stanley lowered onThurday their growth prognosis for 2013 substantially down to between 1.4 – 1.7 %. Optimistic forecasts have been as high as 3 %.

The weaker growth has given strong ammunition to those who don’t want to set any deadline for monetary easing, as suggested by Federal Reserve and Chairman Ben Bernanke two weeks ago. Their statements led to steep falls in global stock markets and eradicated earlier profit. The influential Chairman of the NewYork stock exchange, William Dudley, said on Thursday that attention should be paid to effects of monetary easing and not on artificial deadlines.

The weaker data, and Dudley’s statement, gave the stock market a strong injection. The rally seen over the last two days continued. Dow Jones again reached the psychological important 15 000 level and traded up 0.89 %. Nasdag equally added 0.94 %. European bourses had another good day after EU finance ministers urged to fight youth unemployment, and took new important steps towards a European bank union. The ministers simultaneously took criticism on the handling of the Cyprus bank crisis and haircutting of private accounts.

These developments had an immediate impact on the currency market, which is deemed to continue to be volatile. EUR/USD recovered from 1.2999 and traded at 1.3032. It needs a clear and more thorough brake to avoid being stuck in bearish territory. The belief in continued easing also hit the other safe haven currency, JPY. British Pound Sterling, GBP, fell dramatically to 1.52. This is the lowest level seen in 3 weeks. The weaker pound came as a reaction to an adjustment of British economic growth in the first quarter. Growth is much lower than expected.

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Old 01-07-2013, 06:05
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30 JUNE 2013: NEW VOLATILITY EXPECTS MARKETS

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


The fears for an early termination of Federal Reserve’s (FED) stimulus might be gone for now after the US down revision of growth, and disappointing data on jobless claims at the end of last week. This does not help global markets which are entering July, nervous for new volatility. Hopefully the panic selling of equities witnessed in June has come to an end, but a poll demonstrates that managers have taken substantial capital out of their funds, sitting on the fence with cash waiting for a new development.

The US stock markets ended in red on Friday with Dow Jones Industrial again dipping below the critical 15 000 benchmark. Global stock markets lost ground in June giving away 1.3 % of the gains in 2013, triggered mainly by several central banks economic stimulus. Hardest hit are the markets in Asia. Japan’s “Abenomics” turned for a short while the Japanese Nikkei seemed to be a success story. The Nikkei, however, suffered serious losses with the strengthening of the YEN on FED’s indication for a possible deadline for their bond buying program.

It has been a lackluster month for commodities and precious metals. Gold, which for the last fifteen years has been regarded as a strong hedge, has fallen 23% only the last quarter. It recovered nicely on Friday, but this “recovery” might rather be seen as a technical correction after the earlier steep falls. Commodities with copper was also up 1% last week after losing 10% the last quarter. Oil prices have been keeping relatively steady. Brent has been able to stay above the critical USD 100 a barrel.

The Dollar gained ground against both the Yen and the Euro on Friday. EUR/USD dipped again below 1.30 after breaking through the strong technical resistance represented by the 200 days moving average on 1.3062 earlier in the week. The President of the ECB, Mario Draghi, suggested that it might be necessary to undertake stronger ECB-stimulus to get the Euro zone out of the deep recession as European finance ministers are becoming increasingly worried of the social and economic consequences of an unemployment figure above 25 % in many member countries

The unemployment among youth is reaching alarming proportions and stands above 50% in most southern European countries. On Friday, Croatia became the last country to join the EU, but the prospects of privatizations leading to more unemployment do not create great enthusiasm. If the EU, based on recession realities, have to take talk on stimulus seriously, that shall immediately have a negative effect on the strength of the Euro. Volatility seems therefore to be the order of the day in July.

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Old 02-07-2013, 08:00
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02 JULY 2013: EUR/USD AND GOLD GAIN ON MANUFACTURING

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


Stronger than expected manufacturing data from Europe and Japan yesterday lifted the EUR/USD to 1.3052 up from last week’s low of 1.2983. DXY, the USD index against a basket of currencies, fell 0.2 % while the USD/JPY again sniffed on 100 Yen/Dollar level. For the first time in months there was positive manufacturing data from the Euro zone and England. This created a better market sentiment with increased appetite for risk. Stock exchanges in Europe and the US ended higher.

The Dow Jones traded close to 15 000 at 14 974 up 0.5 %. The technology heavy Nasdaq added 0.85 %. After falling as low as USD 1180 an ounce Friday, gold gained both yesterday and is up 2.1 % today at 1250. Other commodities such as copper, also recovered. Oil prices got a welcomed boost by the stronger manufacturing. New York crude, NYMEX, jumped above USD 98 a barrel and Brent crude reached USD 103 after trading close to 100 at the end of last week.

The increased gold prices represent the most interesting development during this week.Triggered by the comments from the Federal Reserve, FED, gold started its slide in earnest in April when FED Chairman, Ben Bernanke, set out a framework for the first time for the US central bank to exit its “quantitative easing”.

Gold peaked at USD 1250 yesterday. The open question now is whether USD 1180 represents a bottom, and this week’s turn around is a technical correction after the 29.5 % tumble since the 1st of January. Investors shift away from Gold has been dramatic. Fund managers have been selling one fifth of their Gold holding, and the interest for Gold futures and options are the weakest since 2005.

Some analysts see investor’s positioning so extreme that Gold, in the short term, is unlikely to fall much lower. A sidelong trade is expected. Impacting Gold negatively is weak Asian interest presently. Asians have been the strongest supporters with Gold declining, but this time there is no appetite for buying. The concentration has instead been on the high cost of Gold producing.

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Old 03-07-2013, 06:58
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03 JULY 2013: US-STOCKS DIP IN VOLATILE SESSION

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


Stocks in the US dipped Tuesday afternoon on weak trade volumes. The session started in positive territory, with technology and industrial shares gaining after one of the big car manufactures, Ford, presented good sales numbers pointing towards the economic turnaround, witnessed as well by data earlier in the week. In spite of strong car sales in June, markets turned down. Dow ended down well below the 15 00 mark. Continued unrest in Egypt with a military ultimatum to president Mursi, led oil prices higher and boosted the energy sector.

The low volumes in the equity market were partly due to the forthcoming US Independence day on Thursday.The markets are also closed for trading the second half of Wednesday. Jobless claims are going to be presented on Friday. The number of jobless might be a new important indicator on when the Federal Reserve (FED) is going to start tapering and set a final date for terminating its economic stimulus and ending its bond buying program. Better jobless claims will be seen as an improvement of the US economy, which might lead to an early termination of economic stimulus.

The US Dollar raised to its highest level against the Japanese Yen since the recent volatility seen in the stock and currency markets, which started with FED’s indication of setting a date for terminating monetary easing two weeks ago. USD/JPY jumped again over the 100 Yen a Dollar mark and reached 100,72. The Dollar index, DXY, where the Dollar is weighed against a basket of currencies, reached the highest level seen in four weeks. The weaker Japanese Yen caused the Nikkei to jump 1.7 %.

EUR/USD fell 0.7 % at 1.2962, nearly 100 points down from Monday’s high. Copper and other commodity prices were up. Brent crude rose for the third day in a row reaching above USD 104 a barrel. NYMEX, New York crude, traded close to 100 a barrel. Gold prices, which have jumped over the last two days, fell back to 1242, 10 Dollar down from Monday’s high. The other important precious metal, Silver, fell back as well. Portuguese bonds sank to their lowest level in weeks, when three ministers left the government in protest against the austerity measures.

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Old 04-07-2013, 07:45
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04 JULY 2013: OIL PRICES SKYROCKET DUE TO TURMOIL IN EGYPT

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


Oil prices moved steadily up yesterday on continued turmoil in the Middle East, and threat of disruptions in the transportation of Oil from the region. NYMEX, New York crude, is up 4%, trading at USD 101 a barrel. Brent crude raised to USD 105.75 after the Egyptian military ousted the elected president Mohammed Morsi, who rejected to give in to the presented ultimatum to withdraw.The military has taken over power and promised to prepare for new presidential elections.

The military coup came after thorough demonstrations and clashes between supporters and opponents of Morsi. President Morsi’s opponents welcomed the military intervention. The unrest in Egypt threatens the stability in the whole Middle East; Egypt being the most populous state in the region with borders also to Israel. Gold and Silver, which have fallen steeply over the last few months, also gained on the development, as did the Japanese Ten. USD/JPY trades at 99.93. EUR/USD is 1.3003.

Attention in the US was focused on the jobless claims which came in 5000 lower than last week. Unemployment data for June is slightly better than in May, falling to 7.5 %. This is still far from the 6.5% the US Federal Reserve (FED) has set as a target for ending quantitative easing. Presented numbers on trade and services were disappointing, and do not point to a quick turnaround in the American economy.

Dow Jones and Nasdaq ended up, after a short and volatile session before closing for the 4th of July Independence celebrations. Dow was 12 points short of breaking the 15 000 level. European markets were weak after the last turmoil in Portugal, where several ministers including the influential Minister of Foreign Affairs, have threatened to leave the government. The political crisis has revived fears of a Portuguese debt crisis. In Greece there are questions whether the Samaras-Government will be able to live up to the obligations set by the troika, which put pressure on European equity markets and indeed the Euro.

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Old 05-07-2013, 08:46
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05 JULY 2013: DRAGHI’S COMMENTS BOOSTED STOCK INDEXES TO RECORD GROWTH

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


Yesterday we could see rapid growth on the world markets after the meeting of the European Central Bank, Bank of England and speech of Mr. Draghi. Increase in the main world stock indexes had more emotional character rather than fundamental. In general, the head of the European Central Bank once again calmed investors with verbal interventions and there were no steps undertaken. Mr. Draghi once again confirmed preservation of stimulating policy of the European Central Bank, and let investors know that interest rates are going to be kept on a low level for a long time. In comparison, more or less the head of the European Central Bank gives us the same comments and information that we consequently hear from Mr. Bernanke.

Despite the fact that the trading session in the USA has been closed, the leading stock exchanges finished the trading session on Thursday in positive territory. The index of the London stock exchange FTSE 100 grew by 2.9%, the index of the Parisian stock exchange CAC 40 added 3.08%, the index of the Frankfurt stock exchange DAX rose by 2.11%.

As for the currency market, we saw steep falls in many currencies in relation to the American Dollar. EUR/USD from the level of 1.3008 dropped down to a minimum on 1.2882, this morning - pair is traded on a level of 1.2897.

Great British Pound was the first one to start correction in relation to the Dollar, having vigorously reacted to hints from the Bank of England. The monetary policy, as expected, remained the same, however Mark Carney didn't want to waste time and already made changes in tactics of communication with the market. If earlier the accompanying statement, in case of an invariable course, wasn't published, now decisions and actions of the bank will be more transparent. Within comments it was noted that despite positive signs of economic recovery, in comparison to historical measures – it still remains weak. This means that the most probable level of an interest rate will not be defined by the current signals. These words immediately sent pair GBP /USD down: from level of opening at 1.5277 to a minimum of 1.5054, having finished the trading session only 15 points higher. This morning, the Pound continues to bargain next to the level of 1.5000.

Today investors are going to wait for unemployment figures from the United States, which will have an influence on the markets and will help to decide on further direction of the markets.

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Old 08-07-2013, 08:05
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08 JULY 2013: STRONGER LABOR DATA STRENGTHENS USD

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


US stocks jumped one percent on Friday, while the Dollar rallied, and interest rate on debt treasury bills fell as the US labor market presented stronger data than expected, showing that the US economy is on a more solid footing. The data will be a strong argument for the Federal Reserve (FED) to start tapering the bond buying program already in September. Non-farm payrolls increased with 196 000 in June. Unemployment stays at 7.6 %. FEDs official target for a healthy unemployment bill stays at 6.5 %.

The Dollar index, DXY, against a basket of major currencies is strongly up. EUR/USD traded Friday on 1.2831, the lowest level seen in months. The trend towards a weaker Euro is most likely to continue this week, with USD/JPY moving towards an earlier peak on 103 Yen against the Dollar. Commodities listed in USD are falling with the strength of the Dollar. Precious metals are again hard hit with Gold falling 2.1 %.

EU finance ministers are meeting in Brussels today to decide on releasing a third bailout and rescue package on 8.1 billion Euro for Greece. The troika of lenders; The European Central Bank (ECB), EU-commission and International Monetary Fund, IMF, have expressed strong dissatisfaction with the slow implementation of the 12 500 reduction of civil servants. The troika has been under fire for the austerity measures undertaken against Greece. An IMF representative admitted lately that their policies had aggravated the problems in the Greek economy.

The EU Commission has flatly rejected these claims, and the Finance commissioner for EU, Olli Rehn, stated that Greece has to intensify its reform commitment. The Samara's three party government, consisting of the EK right party, social democratic PASOK, and left of center party, has steadily lost authority, threatening Greece with new elections and an unpredictable outcome most likely strengthening the socialist left and the far right Golden Dawn party. Both parties reject continued austerity measures.

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Old 09-07-2013, 07:58
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09 JULY 2013: USD CORRECTS DOWN REACHING 3-YR HIGH

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


US Dollar corrected down 0.3 % after the DXY: a basket of major currencies weighed against USD, reached a 3-year high yesterday. EUR/USD traded at 1.2876 after dipping close to 1.28. USD lost to JPY with 100.93 Japanese Yen paid for a Dollar. Oil prices, which jumped, after new clashes over the weekend between supporters of President Mursi and his Muslim Brotherhood and the military forces, left 17 dead in Cairo's streets. Brent lost 29 cents to USD 107.43 a barrel. NYMEX, New York crude, stood at 103.14. Gold gained 20 Dollars to 1228 on a weaker Dollar.

Alcoa, the alloy giant, was, as always, the first company to present quarterly results. The report was slightly better than analysts expected. Global stock markets were strong on Monday with European and US indexes posting gains. Asia started the week in red Monday morning after credit worries in China. Nikkei was the only Asian exchange gaining ground on a weaker Yen boosting exports. Also on Monday a US advisory company recommended shareholders to accept Michael Dell’s USD 24.4 Billion buyout offer.

In Brussels, Greece secured a Euro 8.7 Billion lifeline. The Samara's government came under heavy pressure before yesterday’s Minister of Finance meeting. The new bailout tranche was given on the condition that Greece deliver on its promise to cut 12 500 jobs in the public sector and continue vigorous austerity efforts. Bailout funds might be withheld if these conditions are not met.

In a situation where the US Federal Reserve (FED) due to slightly better data, probably might start tapering monetary easing already in September, both the European Central Bank (ECB) and Bank of England (BOE) have stated willingness to go in the opposite direction and follow FED’s earlier example to ease monetary policies and actively use the printing press. This has put the British pound (GBP) under strong pressure. USD/GBP has fallen below 1.50 trading at 1.4955, the lowest level seen in a long time.

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Old 10-07-2013, 09:19
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10 JULY 2013: CHINA FACES “GRIM” TRADE OUTLOOK

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


Both import and export figures in the second-largest economy in the world fell in June. Exports fell 3.1% from the previous year, while imports dropped 0.7%. Trade figures were expected to rise. The fall in import and export follow a government crackdown on the use of fake invoicing that had exaggerated exports earlier this year. The figures raise fresh concerns about the slowdown in China and global demand. A spokesman for the Chinese customs authority stressed that China faces stern challenges and “exports in the third quarter look grim”.

The customs agency said exporters are losing confidence faced with weak overseas demand, rising labor costs and a strong Yuan currency. The Australian Dollar fell immediately in the trade figures, reflecting worries about Chinese demand for Australian commodities, such as iron and coal. In spite of the weaker figures, China had a trade surplus of USD 27.1 billion in June, in line with the USD 27.0 billion forecast. Economic growth in China in 2013 is still expected to be 7.5 %.

The grim trading figures created expectations that the Chinese Central Bank might ease policy to boost growth. These expectations made Chinese shares rise sharply. The major Chinese index gained 2.2 % on the easing talk. The MSCI-index for Asia Pacific also gained 0.7% boosted as well by Wall Streets optimism for US company earnings. Copper prices added 0.5 % and both Brent crude and the New York NYMEX, trade higher on USD 108 and 104 a barrel respectively.

Concerns over China pulled the Dollar DXY down from a three-year high against a basket of major currencies. The Dollar fell 0.6% to 100.52 Yen. The stronger Yen impacted the Nikkei index which fell 0.4 %. Investors are betting on further Dollar gains as the US Federal Reserve (FED) prepares to scale back on its USD 85 billion a month stimulus program. The minutes from FED’s June meeting will be published later today, accompanied by a statement from Chairman Ben Bernanke which is expected to give the Dollar a further boost.

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Old 11-07-2013, 07:47
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11 JULY 2013: USD SUFFERS HEAVY LOSSES

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


Currency markets turned completely upside down over the last twelve hours, with the Dollar losing heavily towards all major currencies. EUR/USD has gained close to 300 points over the last 24 hours and trades at 1.3136. Japanese Yen (JPY) and British Pound Sterling have posted similar gains against the green back. USD/JPY brushed back through the 100 level and trades at 98.54. USD/GBP, which traded at the 1.47 level at the beginning of the week, stands at 1.5157. The weaker Dollar has caused commodities, oil and precious metals to skyrocket.

Two factors have impacted the fall in the Dollar. After publishing of US Federal Reserve (FED) minutes for June, Chairman Ben Bernanke reiterated the low interest rate policies which impacted the Dollar; FED is in no rush to raise interest rates. The minutes showed disagreements among members when the bond buying program should be terminated. A majority wished to pare down bond purchases in 2013 while other members stressed asset purchasing would be needed in 2014 also.

What really triggered the fall in the Dollar was a statement from the Bank of Japan (BOJ) raising its assessment of the economy, but cutting the growth and inflation outlooks. The forecast for Japanese inflation in 2014 was put at 0.6 instead of 0.7 percent. Earlier this week the Euro hit a three-month low against the greenback on diverging monetary policy expectations between central banks. The conditions of the US economy would therefore be decisive for the currency pair. Statistics on retail sales and consumer prices due later in the week are going to be closely watched.

The long term perspective on the Euro is bearish, but it seems likely that EUR/USD might correct higher in the short run. The DXY index, which measures the Dollar against a basket of six other major currencies, stumbled from 84.027 to 82.693; even the embattled Australian Dollar gaining ground. Gold jumped to USD 1286 up 2.2 %. Silver is up 3 %. NYMEX, New York crude, stands at record USD 106 a barrel and Brent trades at USD 108.28.

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Old 12-07-2013, 08:05
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12 JULY 2013: RECORD RUSH ON WALL STREET

DAILY MARKET REVIEWS
by Arne Treholt Vice-President of Business Development and Investments


Dow Jones and S&P jumped to an all time high and the technology heavy Nasdaq index reached the highest level since 2000, in the aftermath of the publishing of the US Federal Reserve (FED) minutes and new statements by Chairman Ben Bernanke in Boston yesterday. EUR/USD, which fell to 1.3208 Thursday morning recovered during the day, but dipped back to 1.31 following Bernanke’s strong commitment to keep interest rates at the present low level. It trades at present at 1.3081.

Bernanke’s speech reiterated that the US economy is volatile. The 7.6 % unemployment is far from FED’s 6.5 % target for the labour market. The jobless claim numbers for last week published yesterday were higher than the previous week and confirm Bernanke’s soberness. The markets interpret his comments as a confirmation that a September tapering of monetary easing is not in the cards. As several FED members stressed in the June Minutes, the bond buying program will continue into 2014. This boosted stock markets and led to termination in stock short positions yesterday.

In Asia the Asian Pacific MSCI-index lost steam after three winning sessions, ending up only 0.2 % as markets brace for Chinese GDP data early next week. China’s weak foreign trade data for June provide a pessimistic edge to the second quarter estimates, which probably will show that GDP has slowed further. The government’s official forecast on 7.5 % economic growth set for 2013 might prove to be too optimistic.

After a 24 hour heavy sell off in the Dollar as investors cut bullish positions on Bernanke’s pledge, currency markets are steadier into the last trading day of the week. The Dollar index, DXY, experienced its steepest fall in four years. Some analysts see the fall in the Dollar as a buying opportunity on expectations of a FED autumn tapering on the presumption of US GDP growth in the third and fourth quarters. Oil lost momentum when traders took profit following a three week rally that lifted prices to a 15 month-high. US crude, NYMEX, eased back to USD 105 a barrel reaching 107.45.

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