FKLI Commentary on 15/06/09

FKLI futures June contract surge 7 point higher to close at 1090.5 as compare to previous trading session with total 5,497 lots traded in the market. FKLI was mainly consolidated during the trading session while awaiting fresh market leads for further directions.

Technically, FKLI seems completed the 78.6% Fibonacci projections at 1090.5 regions after manage to cap new high at 1092 regions. Based on our technical analyst, we still suggest FKLI was seen topped around resistance levels at 1094 and 1110 regions. Traders were suggest to hold short position in the coming trading session provided resistance level were not violated during trading session while be alert that support levels seen at 1080.5 and 1073 while confirmation to break down from rising wedge seen at 1063 regions.

FCPO Commentary on 15/06/09

FCPO 3rd month August Futures contract fall RM20 lower to close at RM2465 levels as compare to previous trading session with 9,289 lots traded in the market. CPO price mainly traded lower during the trading session as soybean oil and crude oil electronic trading plunge during 2nd trading session.

Technically, CPO price seems temporary supported above the support levels at RM2466 regions; 23.6 % Fibonacci retrace levels. Based on our technical analyst, we suggest CPO would trade lower in the coming trading session towards support levels at RM2425 and RM2385 regions. Traders were advice to hold short position in the coming trading session while be cautious around resistance levels at RM2525 and RM2575 regions.

Soybean Cash Premiums Narrow as Buyers May Purchase From Brazil

June 12 (Bloomberg) -- The premium for soybeans at export terminals near New Orleans narrowed relative to Chicago futures for a third day on speculation that demand for U.S. supplies will drop as Brazilian prices fall.

The so-called spot-basis cash bid, or premium, for soybeans moved by barge to ports along the Gulf of Mexico this month was 58 cents above July futures, down from an average 58.5 cents yesterday, U.S. Department of Agriculture data show. The cash premium for Brazilian soybean exports has fallen from 55 cents over July futures in Chicago to 5 cents in the past week, said Roy Huckabay, a Linn Group senior vice president in Chicago.

“U.S. soybeans are no longer competitive” with exports from Brazil as sales in the South American country rose, Huckabay said.

Soybean futures for July delivery fell 21.5 cents, or 1.7 percent, to $12.455 a bushel on the Chicago Board of Trade. The price still gained 1.6 percent this week after the USDA on June 10 projected domestic inventories to be the lowest since 1977 on Aug. 31, before the next harvest.

Brazil cash premiums for exports of animal feed made from soybeans disappeared in the past week, dropping from $51 a metric ton more than July soybean-meal futures in Chicago to a discount of $29 a ton as demand slowed, Huckabay said.

“It is cheaper to import soybean meal from Brazil into the U.S. southeast” than to move supplies by train from the Midwest, he said.

Soybean-meal futures for July delivery fell $5.30, or 1.2 percent, to $422.70 a ton in Chicago, after touching $433.40 a ton yesterday, the highest price for a most-active contract since July 7.

Oil, Gasoline, Fall on Record European Industrial Output Drop

June 12 (Bloomberg) -- Crude oil and gasoline fell for the first time in four days as a record plunge in European industrial production prompted speculation that bets on an economic recovery are premature.

Futures dropped from a seven-month high after a report showed that output in the euro region declined 21.6 percent from a year earlier. The dollar strengthened, undermining the attractiveness of commodities as an alternative investment. OPEC said members raised production in May for a second month, straying further from quotas.

“Crude had such a powerful rally that it was vulnerable to a correction,” said Tom Bentz, a senior energy analyst at BNP Paribas Commodity Futures Inc. in New York. “The negative economic numbers from the euro zone got it going. The dollar got stronger on the news from Europe, which has hit crude.”

Crude oil for July delivery fell 64 cents, or 0.9 percent, to settle at $72.04 a barrel at 2:50 p.m. on the New York Mercantile Exchange. Futures have gained 62 percent this year.

Yesterday, the contract rose $1.35, or 1.9 percent, to $72.68 a barrel, the highest settlement since Oct. 20. Prices increased 5.3 percent this week.

Gasoline for July delivery declined 2.18 cents, or 1.1 percent, to end the session at $2.0431 a gallon in New York.

“The market has excessively priced in the idea that a demand recovery is imminent,” said Eugen Weinberg, an analyst with Commerzbank AG in Frankfurt. “Upbeat sentiment might drive prices higher in the short term, but later in the summer fundamentals will play a larger role and a massive price correction is likely.”

European Output

Production in the 16-member euro region plunged the most since the data series started in 1986, the European Union’s statistics office in Luxembourg said today. Economists expected a 19.8 percent decline, according to a Bloomberg News survey. From March, output declined 1.9 percent.

“Today’s move just shows how this market is getting its cue from the dollar,” said Bill O’Grady, the chief markets strategist at St. Louis-based Confluence Investment Management LLC, an investment advisory and management firm. “Commodities are down pretty much across the board today because of the dollar’s move higher.”

The dollar strengthened 0.7 percent to $1.4017 per euro, from $1.4108 yesterday. The dollar may briefly weaken above $1.50 against the euro before September as central banks sell the currency, Thomas Stolper, an analyst for Goldman Sachs Group Inc. in London, said on June 11.

“Money is coming out from under those mattresses,” Adam Sieminski, chief energy economist at Deutsche Bank AG in Washington, said today on Bloomberg Radio. “A falling dollar can induce people to put money into commodities.”

Technical Analysis

Oil is poised to reach $75 a barrel after rising above $73 yesterday, according to technical analysis by Newedge USA LLC. The next resistance level that oil will meet is at $75, then $78.25, said Veronique Lashinski, a senior research analyst for Newedge in Chicago. Prices last topped $78.25 on Oct. 15 when they touched $79.17.

“It’s still pointing higher,” Lashinski said in an interview yesterday. “The weekly continuation chart is very strong.”

The 11 members of the Organization of Petroleum Exporting Countries bound by production targets, all except Iraq, pumped 25.903 million barrels a day in May, an increase of 118,800 barrels a day from April, the Vienna-based group said in its monthly oil report today, citing secondary sources that include estimates from analysts and news organizations.

OPEC has implemented 75 percent of planned output cuts of 4.2 million barrels a day, compared with 77 percent in April, based on data in the report.

Chinese Fuel Production

China, the world’s second-biggest energy-consuming country, processed a record volume of crude oil in May as higher factory output and a jump in car sales increased fuel demand. Refineries processed 31.2 million metric tons, or about 7.4 million barrels a day, of crude into fuels, China Mainland Marketing Research Co., which compiles data for the government, said in a statement today.

“This is real news that’s pointing to increased Chinese demand,” O’Grady said. “This shows they are actually using all the oil they import, not just putting it away in storage.”

Brent crude for July delivery fell 87 cents, or 1.2 percent, to settle at $70.92 a barrel on London’s ICE Futures Europe exchange. Yesterday, the contract rose 99 cents, or 1.4 percent, to $71.79, the highest settlement since Oct. 20.

Crude oil volume in electronic trading on the Nymex was 373,710 contracts as of 2:58 p.m. in New York. Volume totaled 651,848 contracts yesterday, 29 percent higher than the average over the past three months. Open interest was 1.23 million contracts. The exchange has a one-business-day delay in reporting open interest and full volume data.

Dollar Rises as Yosano’s Comments Ease Diversification Concern

June 12 (Bloomberg) -- The dollar advanced against the euro and the yen after Japanese Finance Minister Kaoru Yosano said his nation’s confidence in U.S. debt is “unshakable” and that the currency’s global status is safe.

The Canadian dollar and Norwegian krone declined versus the greenback after crude oil dropped from a seven-month high. The Latvian lats was poised for its best week in more than five years as the Baltic state moved closer to securing International Monetary Fund financing needed to avert bankruptcy.

“They try to provide some verbal support for the dollar; try to make sure the yen doesn’t get too strong because that economy is in quite a lot trouble right now,” said Nick Bennenbroek, head of currency strategy at Wells Fargo & Co. in New York, in an interview on Bloomberg Television. “They want to protect the value of the assets they already have in terms of Treasuries. If there’s going to be a move away from the dollar, it’s going to be very gradual, very cautious.”

The dollar strengthened 0.8 percent to $1.3997 per euro at 4:07 p.m. in New York, from $1.4108 yesterday. The U.S. currency rose 0.8 percent to 98.40 yen, from 97.63 yen. The euro was little changed at 137.73 yen, from 137.74 yen.

For the week, the dollar is down 0.3 percent versus the yen and 0.2 percent against the euro. The yen was little changed versus the euro this week.

The Canadian currency dropped 1.5 percent to C$1.1187 per U.S. dollar, heading for a second weekly decline, after crude oil dropped as much as 2.6 percent to $70.80 a barrel. The krone fell 0.3 percent to 6.3396 per U.S. dollar.

Latvian Bailout

Bank of Canada Governor Mark Carney repeated yesterday that he’ll keep interest rates low until the middle of 2010, and that the Canadian dollar’s appreciation could impede growth in the world’s eighth-largest economy. The currency has gained 13 percent over the past three months. Oil is the biggest export of Canada and Norway.

Latvia’s parliament may sign budget-spending cuts required by its 7.5 billion euros ($10.4 billion) international bailout into law as early as June 15, Prime Minister Valdis Dombrovskis said today.

The lats added 1.7 percent this week against the euro, after trading little changed today at 0.697. The currency is pegged to the euro around a 1 percent target mid-point of 0.702804.

The dollar rose against 15 of the 16 most-traded currencies today after Japan’s finance minister signaled that the second- biggest foreign holder of Treasuries will keep purchasing U.S. government securities. China is the largest U.S. creditor. The Brazilian real was the only currency to gain today versus the greenback.

‘Absolutely Unshakable’

“We have complete trust in the fact that the U.S. views its strong-dollar policy as fundamental,” Yosano said in an interview in Tokyo on June 10 before attending the G-8 meeting of finance ministers in Italy. “So our trust in U.S. Treasuries is absolutely unshakable.”

Brazil and Russia joined China this week in saying they would shift some $70 billion of reserves into multicurrency bonds issued by the International Monetary Fund, raising concern central banks are diversifying away from dollars. Leaders of Brazil, Russia, India and China, the so-called BRIC countries, are scheduled to meet on June 16 in Russia to discuss their economies.

A 30-year Treasury auction yesterday showed overseas demand for U.S. government securities remains robust. Indirect bidders, a class of investors that includes foreign central banks, bought 49 percent of the $11 billion in bonds, the biggest percentage since the Treasury reintroduced the 30-year security in 2006.

‘Difficulty of Transitioning’

“You cannot ask for an alternative to the dollar without offering that alternative,” said Daniel Tenengauzer, head of foreign-exchange and emerging-market debt strategy at Bank of America-Merrill Lynch, in New York, in an interview on Bloomberg Television. “They understand the difficulty of transitioning out of the dollar.”

Treasury Secretary Timothy Geithner said in China on June 1 that the U.S. is committed to a strong dollar, while promising to bring down the country’s fiscal deficit. Luxembourg Finance Minister Jean-Claude Juncker, who leads euro-area finance chiefs, said on June 4 a further increase in the euro against the dollar would be unwelcome.

The dollar also pared a weekly decline after the Wall Street Journal reported the Federal Reserve will resist pressure to increase bond purchases, avoiding adding to the supply of the currency.

‘Under Pressure Again’

The Dollar Index, used by the ICE to track the greenback against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, has lost 9 percent in the past three months amid concern the Fed’s purchase of government bonds will flood the market with dollars.

“The market is cautious, and the dollar regains some ground,” said Ian Stannard, a currency strategy at BNP Paribas SA in London. “The overall move toward improving risk appetite remains in place. With the G-8 meeting out of the way next week, the dollar will come under pressure once again.”

Ten-year note yields reached 4 percent yesterday, the highest since October.

Rising yields are more a reflection of investors’ concern of U.S. fiscal deficit, than an indication of a strong economic recovery, suggesting the dollar may weaken, according to Camilla Sutton, co-head of currency strategy at Scotia Capital Inc. in Toronto.

“We are in the dollar bear camp,” said Sutton. “We are waiting for the new catalyst for the dollar to break out of the range.”

Soybean Futures Set for a Seventh Weekly Gain on Rising Demand

June 12 (Bloomberg) -- Soybean futures are set for a seventh weekly gain in Chicago after reaching a nine-month high yesterday as the weaker dollar made U.S. supplies more attractive to overseas buyers.

The Dollar Index, which tracks the greenback against six major currencies, has fallen 6.7 percent this quarter. U.S. inventories of the oilseed may drop to a 32-year low of 110 million bushels by Aug. 31, the nation’s agriculture department said June 10.

“People are generally concerned about the supply issue, as well as demand,” Jonathan Barratt, managing director at Commodity Broking Services Pty in Sydney, said by phone today. “We’ve seen the dollar weak as well. It’s a combination of everything.”

Soybeans for July delivery gained as much as 1.2 percent to $12.8175 a bushel in after-hours trading on the Chicago Board of Trade, after reaching $12.9125 a bushel yesterday, the highest since Sept. 3. The most-active contract was at $12.7225 at 2:21 p.m. in Singapore and is set for a 3.8 percent gain this week.

Soybean meal, an ingredient in feeds for livestock, rose as much as 1 percent to $432.30 per 2,000 pounds, and was last at $428.20. The July-delivery contract is headed for an 8.1 percent gain this week, after trading at an 11-month high of $433.40 yesterday.

The futures have gained 66 percent in the past six months, outpacing the 49 percent rise in soybean prices, after the market underestimated demand, Commodity Broking’s Barratt said.

“We obviously have some very large demand out of China,” he said.

U.S. Exports

Shipments of soybean meal from the U.S., the world’s third- biggest supplier, rose 34 percent to 189,821 metric tons in the week ended June 4 from a week earlier, the U.S. Department of Agriculture said in a report yesterday.

Crushing soybeans has become unprofitable in China after costs of the bean imports surged, state-owned China National Grain and Oils Information Center said June 4.

“There just seems to be more demand for the meal, rather than the actual bean itself,” Barratt said. “You might have a stockpile in beans which can be drawn into or drawn down, but if you’re not refining into the meal, then you’ve got an issue.”

Soybean oil exports rose 54 percent to 6,577 tons, from 4,278 tons a week earlier, the USDA said.

Corn for July delivery fell 0.5 percent to $4.39 a bushel, taking its loss for the week to 1.1 percent.

Korean Tender

Nonghyup Feed Inc., South Korea’s biggest single buyer of feed grains, purchased as much as 275,000 tons of corn, said two industry executives who participated in yesterday’s tender.

Wheat for July delivery fell 0.8 percent to $5.90 a bushel, taking the weekly loss to 5.3 percent.

Morocco will reap 4.5 million tons of soft wheat in the 2009-10 marketing year, 77 percent more than a year earlier, the USDA Foreign Agricultural Service reported. Durum wheat production will increase 61 percent to 2 million tons, the FAS said in a report dated June 8.

The country will import 1.5 million tons of common wheat and 600,000 tons of durum wheat, the FAS said.

Canada’s wheat production may fall 18 percent this year as dry, cool conditions in the western Prairies slow crop development and wet weather in Manitoba delays seeding, the Canadian Wheat Board said in a report.

Canada’s harvest may include 16.4 million tons of non-durum wheat, down from 20 million tons a year earlier, and 4.4 million tons of durum varieties, down from 5.5 million tons, the CWB said in a preliminary forecast.

Oil Little Changed Near 7-Month High After Rising on IEA Report

June 12 (Bloomberg) -- Crude oil traded near a seven-month high, poised for a fourth week of gains, after the International Energy Agency raised its global demand forecast.

The IEA, adviser to 28 nations, increased its consumption outlook for the first time since August amid signs the recession is bottoming out. Nouriel Roubini, the New York University professor who predicted the financial crisis, said crude will likely touch $100 a barrel next year.

“I think the overall picture is certainly stronger for longer and higher over the next couple of months,” said Peter McGuire, managing director of Commodity Warrants Australia Pty in Sydney. “I would say $80 to $81 would be the new target.”

Crude oil for July delivery fell 23 cents to $72.45 a barrel in after-hours trading on the New York Mercantile Exchange at 10:04 a.m. Sydney time. Yesterday, the contract rose $1.35, or 1.9 percent, to $72.68 a barrel, the highest settlement since Oct. 20. Oil is up 5.7 percent this week.

The Paris-based IEA increased its global estimate for daily oil demand by 120,000 barrels to 83.3 million barrels in its monthly report yesterday. The gain was driven by the U.S. and China. Consumption worldwide will contract by 2.9 percent from last year, the biggest drop since 1981, the adviser said.

The forecast change in demand was countered by expectations for higher output from outside the Organization of Petroleum Exporting Countries. The IEA raised its 2009 estimate for non- OPEC supply by 170,000 barrels a day from May’s report because of production growth in Russia and Colombia and improved North Sea performance.

‘Smart Money’

“The smart money has been in crude for probably the best part of six weeks and longer considering where it has risen since February,” McGuire said.

Oil also advanced yesterday as equities gained on lower jobless claims in the U.S. The Standard & Poor’s 500 Index rose to a seven-month high after the jobless and retail releases bolstered confidence that the economy is recovering. The S&P 500 increased 0.6 percent to 944.89, the highest since Nov. 5.

The number of Americans filing claims for unemployment insurance fell to 601,000, lower than economists had forecast. The number of jobless continuing to collect benefit payments rose to a record for the 19th consecutive time, to 6.82 million, the Labor Department report showed. Retail sales climbed in May for the first time in three months, a separate report showed yesterday.

The dollar declined against most of its major counterparts after the gain in U.S. retail sales and drop in initial jobless claims encouraged investors to buy higher-yielding assets such as commodities. The dollar traded at $1.4108 per euro at 8:07 a.m. in Tokyo, from $1.4108 yesterday in New York.

Commodities Gain

The Reuters/Jefferies CRB Index of 19 raw materials rose 2 percent to 266.17, the highest since Nov. 5.

Gasoline for July delivery dropped 0.74 cents to $2.0575 a gallon at 10:04 a.m. in Sydney. Yesterday, it gained 4.96 cents, or 2.5 percent, to end the session at $2.0649 a gallon in New York. It was the highest settlement since Oct. 3.

U.S. oil stockpiles dropped 4.38 million barrels to 361.6 million in the week ended June 5, the Energy Department said June 10. Analysts surveyed by Bloomberg News forecast supplies to rise by 100,000 barrels. Imports slipped 7 percent to 8.97 million barrels a day. Gasoline stockpiles fell for a seventh week.

Oil touched a record $147.27 a barrel on July 11 as investors purchased commodities as the dollar dropped and on concern that demand would outpace production.

China, the world’s second-biggest oil-consuming country, boosted net crude purchases to 3.9 million barrels a day in May, a 14-month high.

Brent crude for July delivery rose 99 cents, or 1.4 percent, to $71.79 yesterday on London’s ICE Futures Europe exchange, the highest settlement since Oct. 20.

Gold Rises From Two-Week Low on Dollar Drop; Silver Rallies

June 11 (Bloomberg) -- Gold rose from a two-week low in New York and London on speculation that a slide in the dollar will spur demand for the precious metal as a currency alternative. Silver also gained.

The U.S. Dollar Index, which measures the currency against six others, including the euro and yen, fell as much as 1.4 percent, after a gain in U.S. retail sales and a drop in initial jobless-benefit claims encouraged investors to buy higher- yielding assets. Some investors buy gold when the dollar drops.

“Gold is now heading back up as the U.S. dollar is losing ground against the euro,” said Miguel Perez-Santalla, a sales vice president at Heraeus Precious Metals Management in New York.

Gold futures for August delivery rose $7.30, or 0.8 percent, to $962 an ounce on the New York Mercantile Exchange’s Comex division. The most-active contract erased an earlier 1.3 percent loss, rising to the highest settlement this week. Bullion for immediate delivery advanced $1.85, or 0.2 percent, to $956.35 an ounce at 8:36 p.m. in London.

“Gold has reasons to rally,” said Stephen Platt, an Archer Financial Services Inc. commodity analyst in Chicago. “The dollar is pretty risky to be in,” he said. “Chinese demand for gold seems to be better than expected.”

The metal probably will trade at “$990 in a couple of weeks,” he said.

Silver futures for July delivery increased 26.8 cents, or 1.8 percent, to $15.493 an ounce on the Comex. Silver for immediate delivery gained 20 cents, or 1.3 percent, to $15.385 an ounce in London. The most-active silver futures have surged 37 percent on Nymex this year, while gold is up 8.8 percent.

ETF Holdings

Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, was unchanged for a third straight day at 1,132.15 metric tons, the company’s Web site showed yesterday. The total reached a record 1,134.03 tons on June 1.

Retail sales rose in May for the first time in three months, increasing 0.5 percent, as forecast, after a 0.2 percent drop in April, the Commerce Department said in Washington.

Initial applications for unemployment insurance dropped to 601,000 last week from 625,000 in the previous week, the Labor Department reported.

Oil Little Changed Near 7-Month High After Rising on IEA Report

June 12 (Bloomberg) -- Crude oil traded near a seven-month high, poised for a fourth week of gains, after the International Energy Agency raised its global demand forecast.

The IEA, adviser to 28 nations, increased its consumption outlook for the first time since August amid signs the recession is bottoming out. Nouriel Roubini, the New York University professor who predicted the financial crisis, said crude will likely touch $100 a barrel next year.

“I think the overall picture is certainly stronger for longer and higher over the next couple of months,” said Peter McGuire, managing director of Commodity Warrants Australia Pty in Sydney. “I would say $80 to $81 would be the new target.”

Crude oil for July delivery fell 23 cents to $72.45 a barrel in after-hours trading on the New York Mercantile Exchange at 10:04 a.m. Sydney time. Yesterday, the contract rose $1.35, or 1.9 percent, to $72.68 a barrel, the highest settlement since Oct. 20. Oil is up 5.7 percent this week.

The Paris-based IEA increased its global estimate for daily oil demand by 120,000 barrels to 83.3 million barrels in its monthly report yesterday. The gain was driven by the U.S. and China. Consumption worldwide will contract by 2.9 percent from last year, the biggest drop since 1981, the adviser said.

The forecast change in demand was countered by expectations for higher output from outside the Organization of Petroleum Exporting Countries. The IEA raised its 2009 estimate for non- OPEC supply by 170,000 barrels a day from May’s report because of production growth in Russia and Colombia and improved North Sea performance.

‘Smart Money’

“The smart money has been in crude for probably the best part of six weeks and longer considering where it has risen since February,” McGuire said.

Oil also advanced yesterday as equities gained on lower jobless claims in the U.S. The Standard & Poor’s 500 Index rose to a seven-month high after the jobless and retail releases bolstered confidence that the economy is recovering. The S&P 500 increased 0.6 percent to 944.89, the highest since Nov. 5.

The number of Americans filing claims for unemployment insurance fell to 601,000, lower than economists had forecast. The number of jobless continuing to collect benefit payments rose to a record for the 19th consecutive time, to 6.82 million, the Labor Department report showed. Retail sales climbed in May for the first time in three months, a separate report showed yesterday.

The dollar declined against most of its major counterparts after the gain in U.S. retail sales and drop in initial jobless claims encouraged investors to buy higher-yielding assets such as commodities. The dollar traded at $1.4108 per euro at 8:07 a.m. in Tokyo, from $1.4108 yesterday in New York.

Commodities Gain

The Reuters/Jefferies CRB Index of 19 raw materials rose 2 percent to 266.17, the highest since Nov. 5.

Gasoline for July delivery dropped 0.74 cents to $2.0575 a gallon at 10:04 a.m. in Sydney. Yesterday, it gained 4.96 cents, or 2.5 percent, to end the session at $2.0649 a gallon in New York. It was the highest settlement since Oct. 3.

U.S. oil stockpiles dropped 4.38 million barrels to 361.6 million in the week ended June 5, the Energy Department said June 10. Analysts surveyed by Bloomberg News forecast supplies to rise by 100,000 barrels. Imports slipped 7 percent to 8.97 million barrels a day. Gasoline stockpiles fell for a seventh week.

Oil touched a record $147.27 a barrel on July 11 as investors purchased commodities as the dollar dropped and on concern that demand would outpace production.

China, the world’s second-biggest oil-consuming country, boosted net crude purchases to 3.9 million barrels a day in May, a 14-month high.

Brent crude for July delivery rose 99 cents, or 1.4 percent, to $71.79 yesterday on London’s ICE Futures Europe exchange, the highest settlement since Oct. 20.

Dollar, Yen May Weaken as Retail Gain Spurs Higher-Yield Demand

June 12 (Bloomberg) -- The dollar and yen may extend their declines versus the euro after a gain in U.S. retail sales and a drop in initial jobless claims encouraged investors to buy higher-yielding assets.

The euro headed for a weekly advance against the U.S. currency before reports from the Europe and U.S. today that economists say will show industrial output declined at a slower pace in the 16-nation area and consumer confidence improved in the world’s largest economy. The Canadian dollar and Norwegian krone may strengthen against the greenback after crude oil climbed above $73 a barrel yesterday for the first time in more than seven months.

“As expectations that the U.S. economy is bottoming out of the recession are growing, risk appetite is recovering,” said Masahide Tanaka, senior strategist in Tokyo at Mizuho Trust & Banking Co., a unit of Japan’s second-largest bank. “Risk money continues to fly into stocks, commodities and higher-yielding currencies, shifting away from” the dollar and the yen, he said.

The dollar traded at $1.4108 per euro as of 8:07 a.m. in Tokyo, from $1.4108 yesterday in New York. The U.S. currency has fallen 1 percent this week. The euro bought 137.77 yen from 137.74. The U.S. currency was at 97.64 yen from 97.63.

Canada’s dollar traded at C$1.1022 to the U.S. currency from C$1.1025 and Norway’s krone was at 6.2971 per dollar from 6.3221 after crude oil, the two nations’ largest export earner, climbed for a third day yesterday.

IMF Forecast

The International Monetary Fund raised its forecast for global growth in 2010 to 2.4 percent from 1.9 percent, a person familiar with the matter said yesterday. The World Bank predicted the global economy will shrink “close to 3 percent” this year, almost double what it projected in March.

In the U.S., government reports showed yesterday retail sales increased 0.5 percent last month and initial jobless claims dropped last week to the lowest level since January.

European industrial production probably fell 19.8 percent in April from a year earlier, an improvement from a record drop of 20.2 percent in the previous month, according to a Bloomberg News survey of economists before the European Union’s statistics office releases the data in Luxembourg.

The Reuters/University of Michigan preliminary sentiment gauge for June climbed to 69.5, the highest reading since September, from 68.7 in May, according to a separate Bloomberg survey before today’s report.

Reserve Status

The dollar declined 6.6 percent versus the euro last month, the biggest monthly drop this year, on speculation the quadrupling of the U.S. budget deficit and the Fed’s increase of the money supply will undermine the role of the greenback as the world’s main reserve currency.

Bank of China Ltd. intends to cut the ratio of foreign- currency assets it holds by making more new yuan loans in response to the global financial crisis and economic uncertainties, the Wall Street Journal said today, citing Xiao Gang, the lender’s chairman.

The state-controlled bank aims to reduce foreign-currency assets in its portfolio by between 10 and 15 percentage points “over the next few years,” from the current 35 percent, the report cited Xiao as saying in an interview.

Russia and Brazil announced plans on June 10 to buy bonds from the IMF and diversify foreign-currency reserves. China is expected to purchase as much as $50 billion of the bonds, IMF Managing Director Dominique Strauss-Kahn said this week.

The dollar’s status as the world economy’s main reserve currency may deteriorate, Nouriel Roubini, a New York University economics professor who predicted the financial crisis, said at a conference in Athens yesterday.

While it’s “not going to happen overnight,” the development “will diminish the role of the dollar over time,” Roubini said.

FKLI Commentary on 12/06/09

FKLI futures June contract fall 5 point lower to close at 1083.5 as compare to previous trading session with total 5,306 lots traded in the market. FKLI was mainly traded sideways during entire trading session while waiting fresh market leads for new direction.

Technically, FKLI manage to create new high during 2nd trading session and reach 61.8% Fibonacci projection levels while hourly price chart short FKLI consolidate within 1083.5 to 1088.5 range. Based our technically studies, our opinion suggest that major resistance still maintain at 1094 and 1110 regions while rising wedge upper trend line suggest FKLI would trade lower in the coming trading session. Traders were advice to hold short position in the coming trading session if support levels at 1073 and 1066 fail to hold against the selling pressure. Failure to hold above the support shall indicates further selling signal as rising wedge formation seen as confirm once the support levels were violated.

FCPO Commentary on 12/06/09

FCPO 3rd month August Futures contract fall marginally RM16 lower to close at RM2485 levels as compare to previous trading session with 9,484 lots traded in the market. CPO price mainly traded directionless as crude oil and soybean oil overnight and electronic were traded contradicting each other during trading session.

Technically, CPO price seems traded upwards within an uptrend channel trend line in the hourly chart. Based on our technical understanding, we opinion suggest CPO price still riding on the bear market where support levels at RM2460 and RM2400 regions. However, bearish flag formation in the hourly chart would confirm once short term support levels at RM2480 was breached while resistance levels must not be violated. Traders were advice to hold short position in the coming trading session provided resistance levels at RM2525 and RM2575 were not violated.

OPEC Will Wait for $100 Oil Before Raising Output (Update2)

June 10 (Bloomberg) -- OPEC, the supplier of 40 percent of the world’s oil, will only consider increasing output when the price of crude rises to $100 a barrel, according to Kuwaiti Oil Minister Sheikh Ahmed al-Abdullah al-Sabah.

The Organization of Petroleum Exporting Countries, due to meet again in September, wouldn’t raise production with oil at $75, “but if it reaches $100, maybe,” Sheikh Ahmed told reporters in Kuwait today.

Crude oil traded in New York has climbed almost 60 percent this year, after plunging more than $100 in five months at the end of 2008 as the global recession curbed demand for fuel.

Oil prices have increased because investors have bought crude as a hedge against a weakening U.S. dollar, not because demand is rising, Sheikh Ahmed said.

“The numbers, in terms of economic recovery, are not with the rise of oil,” he said. OPEC is seeing signs of an increase in demand for oil in Asia, Sheikh Ahmed said, “but overall we don’t see any rise in demand. That’s why we should be cautious not to be driven by the market.”

OPEC predicted stronger demand as it decided May 28 in Vienna to keep production quotas unchanged. OPEC agreed at three meetings last year that the 11 members with production quotas would reduce output by 4.2 million barrels a day.

Oil futures rose above $71 a barrel yesterday for the first time in seven months, and traded at $71.18 as of 9:14 a.m. on the New York Mercantile Exchange.

Refinery Project

Sheikh Ahmed also said a project, frozen in March, to build Kuwait’s fourth oil refinery is “still the same until it’s discussed by the government.”

Kuwait in May last year awarded contracts to build a refinery in Al-Zour to Japan’s JGC Corp., South Korea’s GS Engineering & Construction Corp., SK Engineering & Construction Co., Daelim Industrial Co. and Hyundai Engineering & Construction Co.Fluor Corp., based in Irving, Texas, was awarded a consulting contract. The 615,000 barrel-a-day refinery was expected to come on stream by 2012. Kuwait said it canceled letters of intent with the chosen companies.

“I’m sure this is a major project, it has to be discussed sooner or later,” Sheikh Ahmed said of Al-Zour.

Kuwait said Dec. 28 it scrapped a deal with Dow Chemical Co. to create K-Dow Petrochemicals. K-Dow is a “dead“ issue, Sheikh Ahmed said today.

Kuwait’s Petrochemical Industries Co. was to pay $7.5 billion for a 50 percent stake in Dow’s basic-plastics unit, the world’s largest producer of polyethylene. The resulting joint venture, known as K-Dow Petrochemicals, would have paid each partner $1.5 billion, boosting Dow’s proceeds to $9 billion.

Gold Unchanged, Erases Early Gain as Rising Dollar Curbs Demand

June 10 (Bloomberg) -- Gold settled unchanged in New York, erasing earlier gains, as a rebounding dollar curbed demand for the precious metal as an alternative investment.

The U.S. Dollar Index, a six-currency gauge of the greenback’s value, rose as much as 1 percent after earlier dropping 0.5 percent. The precious metal typically moves in the opposite direction as the U.S. currency. New York gold futures gained 10 percent in May as the dollar index slid 6.4 percent.

“The fortunes of the U.S. dollar dictated today’s activity in gold,” analysts at RBC Capital Markets in London said today in a report.

Gold futures for August delivery settled at $954.70 an ounce on the New York Mercantile Exchange’s Comex division, after earlier gaining as much as 1.3 percent. Bullion for immediate delivery sank $2.61, or 0.3 percent, to $952.17 an ounce at 7:47 p.m. local time in London.

“The main driver is still the U.S. dollar,” Walter de Wet, a Standard Bank Ltd. analyst in London, said today in a note. “We view the current pullback in precious metals prices on the back of a stronger dollar as temporary.”

The metal fell to $953.75 in the afternoon “fixing” in London, used by some mining companies to sell their output, from $961.25 at the morning fixing.

Gold prices are being supported by strong physical buying this week, de Wet said.

“The main difference between the current buying and that of mid-April is the high gold prices,” he said. “In April, scaled buying was triggered by a fall in the gold price below $880. Now, the buying is triggered by gold below $950.”

Price Outlook

Gold has the potential to break through $1,000 an ounce and may climb as high as $1,100 by the end of the year, Paul Walker, the chief executive officer of research company GFMS Ltd., said yesterday in an interview in Tokyo. Still, next year gold prices may average “$100 below where they are today,” he added.

Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, remained at 1,132.15 metric tons as of yesterday, unchanged since last week, the company’s Web site showed. Gold held in ETF Securities Ltd.’s exchange-traded commodities rose 0.3 percent to a record 7.676 million ounces yesterday, according to the company’s Web site.

Silver futures for July delivery advanced 8.5 cents, or 0.6 percent, to $15.225 an ounce in New York. Silver for immediate delivery fell 9 cents, or 0.6 percent, to $15.155 an ounce at 7:53 p.m. local time in London.

Platinum Gains

Platinum futures for July delivery rose $15.30, or 1.2 percent, to $1,273.20 an ounce on the Nymex. Palladium futures for September delivery gained $1.70, or 0.7 percent, to $258.75 an ounce in New York.

In South Africa, Anglo Platinum Ltd. workers rejected a contract offer that included a 6 percent pay increase, according to an e-mailed statement today from the National Union of Mineworkers. Contract talks are set to resume June 25, the group said. The union has demanded a 15 percent pay increase.

Anglo Platinum is the world’s biggest producer of the metal.

Platinum held in ETF Securities’ ETCs rose 3.3 percent to 336,693 ounces yesterday, according to the company’s Web site.

Crude Oil Little Changed Near $71 After U.S. Fuel Supplies Drop

June 11 (Bloomberg) -- Oil was little changed after rising to a seven-month high on a government report that showed U.S. crude and gasoline stockpiles unexpectedly fell and fuel supplies declined.

Stockpiles of oil dropped 4.38 million barrels to 361.6 million in the week ended June 5, the Energy Department said yesterday. Analysts surveyed by Bloomberg News said supplies would rise by 100,000 barrels. Gasoline inventories slipped for a seventh week.

“The big news last night was the bigger than expected decline in stockpiles,” said Toby Hassall, a research analyst at Commodity Warrants Australia Pty in Sydney. “That’s somewhat of a fundamental justification for this rally continuing in the short term.”

Crude oil for July delivery gained 13 cents to $71.46 a barrel at 10:05 a.m. Sydney time in after-hours trading on the New York Mercantile Exchange. Yesterday, the contract rose $1.32, or 1.9 percent, to close at $71.33, the highest settlement since Oct. 20.

Oil stockpiles are 11 percent higher than the five-year average, down from a 27 percent surplus two weeks earlier, the Energy Department said. Inventories climbed to 375.3 million during the week ended May 1, the highest since 1990.

Stockpiles of gasoline fell 1.55 million barrels to 201.6 million, the report showed. A 750,000-barrel increase was forecast, according to the median of 14 estimates by analysts surveyed before today’s report.

Fuel Demand

U.S. fuel demand in the past four weeks averaged 18.3 million barrels a day, down 6.9 percent from a year earlier, the Energy Department said. There was a 7.7 percent deficit in the week ended May 29. Gasoline use averaged 9.2 million barrels a day during the period, up 0.4 percent from a year ago.

Fuel imports dropped 379,000 barrels a day to 2.55 million, the department said. Crude-oil imports slipped 676,000 barrels to 8.97 million.

Gasoline supplies last week were 3.9 percent below the five-year average for the period, according to the department. There was a 13 percent surplus in the week ended May 22.

Gasoline for July delivery gained 0.47 cents to $2.0200 a gallon at 10:07 a.m. in Sydney. Yesterday, it rose 4.86 cents, or 2.5 percent, to $2.0153 a gallon in New York, the highest close since Oct. 9.

Commodity futures have increased this year as the dollar weakened and equity markets rebounded. Energy and metals usually climb when the U.S. currency declines as investors seek alternative investments.

Dollar to Weaken

Investors worldwide predict that the dollar will weaken as demand for better-yielding assets increases amid rising confidence in the global economy, according to 2,410 respondents worldwide in the Bloomberg Professional Global Confidence Index.

The dollar traded at $1.3983 per euro as of 8:07 a.m. in Tokyo from $1.3984 yesterday in New York.

The Organization of Petroleum Exporting Countries will only consider increasing output when the price of crude rises to $100 a barrel, according to Kuwaiti Oil Minister Sheikh Ahmed al- Abdullah al-Sabah. OPEC is scheduled to meet on Sept. 9.

Oil at between $60 and $90 a barrel is in “the right sort of price range” to ensure future investment, BP Plc’s Chief Executive Officer, Tony Hayward, said at a presentation in London yesterday.

Global oil reserves totaled 1.258 trillion barrels at the end of 2008, down from a revised 1.261 trillion a year earlier, BP said in its annual Statistical Review of World Energy posted on its Web Site yesterday.

Brent crude for July delivery rose $1.18, or 1.7 percent, to close at $70.80 a barrel on London’s ICE Futures Europe exchange. It was the highest settlement since Oct. 20.

FKLI Commentary on 11/06/09

FKLI futures June contract surge 15 point higher to close at 1088.5 as compare to previous trading session with total 6,115 lots traded in the market. FKLI surge up and break new high during trading session as regional indices were recording new high during the sessions.
Technically, FKLI continue to surge high once previous resistance levels at 1078 fails to hold against the buying interest. However, FKLI seems closed on the upper trend line of the rising wedge in the hourly chart. Based on our technical analyst, we suggest that FKLI is likely to test next resistance levels at 1094 and 1110 regions provided support levels at 1073 and 1060 regions were not violated. Despite we expecting FKLI might be trading higher to search for new high, traders who still holding long position were advice to be cautious as open fresh long position would not be advisable as risk rewards ratio shows holding fresh long position would invite greater risk.

FCPO Commentary on 11/06/09

FCPO 3rd month August Futures contract rose RM36 higher to close at RM2501 levels as compare to previous trading session with 10,855 lots traded in the market. CPO price was trade sideways due to contradicting information on crude oil and soybean oil electronic trading surge up while export report figure indicates bearish condition.

Technically, CPO price seems forms a inverted head and shoulder around support region at RM2450 and RM2480 regions. Based our technical knowledge, our opinion suggest that CPO price would likely to test resistance levels at RM2530 and RM2575 regions. However, traders were advice to hold short position provided the resistance levels were not violated while be alert around support levels at RM2450 and RM2400 regions.

Palm Oil May Drop After Malaysian Stockpiles Gain 5.7 Percent

June 10 (Bloomberg) -- Palm oil futures in Malaysia, little changed, may decline as the supply outlook improved after the country’s inventory increased for the first time in six months.

Stockpiles in Malaysia, the world’s second-largest producer, surged 5.7 percent to 1.37 million metric tons in May from a month earlier, data from the country’s Palm Oil Board released during today’s trading break showed. Output climbed 8.5 percent to 1.4 million tons, while exports increased 2.3 percent to 1.2 million tons, the board said. April palm oil stockpiles were the lowest since June 2007.

“While we are positive on our outlook for crude palm oil for 2010, we believe that now is not the opportune time for investors to take a long position,” Macquarie Research analyst Sunaina Dhanuka said in a report today. “Crude palm oil fundamentals are likely to deteriorate in the third quarter.”

August-delivery palm oil on the Malaysia Derivatives Exchange added 5 ringgit, or 0.2 percent, to 2,470 ringgit ($703) a ton at the 12:30 p.m. trading break.

Palm oil for September delivery on the Dalian Commodity Exchange in China, the world’s biggest user, dropped 0.8 percent to 6,466 yuan ($946) a ton at the 11:30 a.m. trading break.

Earlier, independent cargo surveyor Intertek said Malaysia’s palm oil exports dropped to 289,437 tons in the first 10 days of June, down 28 percent from the same period in May.

PT Astra Agro Lestari, Indonesia’s biggest agricultural company by value, said its crude palm oil sales fell 5.5 percent in the first five months of the year as production dropped.

Palm oil in Malaysia, the benchmark contract, has surged 46 percent this year as soybean crops, crushed to make rival soybean oil, decline in Brazil and Argentina and soybean stockpiles in the U.S. are forecast to reach a five-year low.

Oil Rises for Second Day on API Stockpile Drop, Weaker Dollar

June 10 (Bloomberg) -- Crude oil rose for a second day after an industry group reported U.S. crude stockpiles dropped and the dollar declined, bolstering the appeal of energy as an alternative investment.

Oil supplies fell 5.96 million barrels to 357.9 million last week, the American Petroleum Institute said late yesterday. Additional support for crude prices came as the dollar fell against the euro.

“The oil market is rallying due to weakness in the dollar and more liquidity in the marketplace,” said Mike Sander, an investment adviser at Sander Capital Advisors Inc. in Seattle. “There is clearly more money moving into the commodities markets with the sharp rises in agriculture, softs, metals, and energy.”

Crude oil for July delivery gained 62 cents, or 0.9 percent, to $70.63 a barrel at 9:32 a.m. Sydney time in after-hours trading on the New York Mercantile Exchange. Yesterday, the contract increased $1.92 to $70.01 a barrel, the highest settlement since Nov. 4.

Oil peaked at $147.27 a barrel on July 11 before slumping to $32.40 on Dec. 19 as the global recession curbed energy use.

The dollar may extend its decline against the euro as speculation the slowdown may be ending reduces demand for the U.S. currency as a refuge. The dollar traded at $1.4068 against the euro at 6:10 a.m. in Tokyo, after falling 1.2 percent yesterday.

Refinery Rates

The U.S. Energy Department will probably report tomorrow that refiners boosted operating rates to meet summer gasoline demand, according to a Bloomberg News survey.

Refineries probably operated at 86.5 percent of capacity in the week ended June 5, up 0.2 percentage point from the previous week, according to the median of 13 analyst responses.

Gasoline supplies probably increased 750,000 barrels, the first gain in seven weeks, according to the survey. Stockpiles of distillate fuel, a category that includes heating oil and diesel, probably climbed 1.5 million barrels.

Analysts surveyed by Bloomberg News were split over whether crude-oil stockpiles rose or declined last week. The Energy Department is scheduled to release its weekly report at 10:30 a.m. in Washington.

The API collects stockpile information on a voluntary basis from operators of refineries, bulk terminals and pipelines. The government requires that reports be filed with the Energy Department for its weekly survey.

Gasoline for July delivery rose .92 cents, or 0.47 percent, to $1.9759 a gallon in New York at 9:29 a.m. Sydney time. Yesterday, it gained 3.07 cents, or 1.6 percent, to end the session at $1.9667, the highest settlement since Oct. 9.

Price Forecast

West Texas Intermediate crude oil, the U.S. benchmark, will average $58.70 a barrel in 2009, the Energy Department said yesterday in its Short-Term Energy Outlook. The forecast is up 14 percent from $51.70 estimated in May. Crude oil averaged a record $99.57 in 2008.

Venezuela expects the price of crude oil to rise to between $70 and $80 a barrel by the end of the year, Energy and Oil Minister Rafael Ramirez said yesterday. The Organization of Petroleum Exporting Countries isn’t discussing an output increase, he said. The South American country was OPEC’s sixth- biggest oil producer in May, according to Bloomberg News.

Brent crude for July delivery rose $1.74, or 2.6 percent, to end the session at $69.62 a barrel on London’s ICE Futures Europe exchange. It was the highest settlement since Oct. 21.

Gold Rises as Weakening Dollar May Spur Demand; Silver Gains

June 9 (Bloomberg) -- Gold rose, halting a two-session slide, on speculation that a weaker dollar will spur demand for the metal as an alternative investment. Silver also gained.

The U.S. Dollar Index, a six-currency gauge of the greenback’s value, fell from a two-week high on speculation that the global recession is ending, damping demand for the dollar as a refuge. Gold typically moves inversely to the currency.

“When we look at gold, we think that it’s going to be something that investors are going to increasingly want to have in their portfolios,” Peter Arden, an Ord Minnett Ltd. analyst, said today in a Bloomberg Television interview. “It’s an insurance policy. It’s all about giving greater certainty that financial assets are going to have some value.”

Gold futures for August delivery climbed $2.20, or 0.2 percent, to $954.70 an ounce on the New York Mercantile Exchange’s Comex division. Gold for immediate delivery rose $2.12, or 0.2 percent, to $953.93 in London at 7:09 p.m. local time.

Silver futures for July delivery gained 18.5 cents, or 1.2 percent, to $15.14 an ounce on the Comex. Silver for immediate delivery in London added 22.5 cents, or 1.5 percent, to $15.175 an ounce. The futures have gained 34 percent this year, while gold rose 8 percent.

Bullish on Gold

Gold may rise to as much as $1,200 an ounce, Barclays Plc technical strategy analysts said today in a report, citing a “secular uptrend” that keeps them “bullish” on gold in the medium term.

“It is silver that looks the most vulnerable,” based on the ratio of gold to silver, which was 63.7 at the close yesterday, the Barclays analysts said. “With the gold/silver ratio breaking higher, odds favor further upside towards 67.90/69.95 area resistance.”

“Gold is going to be well supported,” Ord Minnett’s Arden said. “We are not looking at anything dramatic in terms of going greatly higher, but it has the potential to. We think it’s going to be volatile, it’s going to move around.”

Gold may have further to fall, according to Jon Nadler, a senior analyst at Kitco Inc. in Montreal.

“The recent heated chatter of the four-digit citadel’s assault is fast losing traction, and the focus has shifted to how low the correction can take gold and/or where the supports may lie in coming weeks,” Nadler said today in research note.

Following the Dollar

Gold rose to $956 in the afternoon “fixing” in London from $952.50 in the morning fixing. The fixing sets the price used by some mining companies to sell their output. Spot prices, up 8.2 percent this year in London, last traded above $1,000 an ounce on Feb. 20.

“We expect gold prices to continue following the dollar trade,” Andrey Kryuchenkov, an analyst at VTB Capital in London, said today in a note.

“Gains could be limited as investors are still cautious of fresh investment after gold faltered around $991,” Pradeep Unni, an analyst at Richcomm Global Services in Dubai, said in a note.

Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, was unchanged at 1,132.15 metric tons, the company’s Web site showed as of yesterday. Gold assets in ETF Securities Ltd.’s exchange-traded commodities added 0.3 percent to a record 7.656 million ounces yesterday, according to its Web site.

Demand for bullion as a haven asset may decline as equities recover. The MSCI World Index of shares has surged 43 percent the past three months. Nobel Prize-winning economist Paul Krugman yesterday said in a speech in London that the U.S. recession may end by September.

Dollar May Drop as Economic Prospects Reduce Demand for Safety

June 10 (Bloomberg) -- The dollar may extend its decline against the euro as speculation the global recession is ending reduces demand for the U.S. currency as a refuge.

The 16-nation currency may gain for a second day against the greenback after Goldman Sachs Group Inc. recommended clients buy the euro versus the dollar, citing a recovery in world growth expectations and a “broader pickup” in demand for higher-yielding assets. The Australian and New Zealand dollars may rise against the yen after crude oil reached a seven-month high and Asian equity futures gained.

“When optimism about the global economy is out there, people feel less need to hold the dollars which they have accumulated for a rainy day,” said Akio Yoshino, chief economist in Tokyo at Societe Generale Asset Management (Japan) Co. “The dollar is likely to remain under pressure.”

The U.S. currency traded at $1.4056 against the euro at 8:52 a.m. in Tokyo from $1.4065 yesterday in New York. The yen was at 136.98 versus the euro from 136.98 yesterday. The dollar bought 97.45 yen from 97.38.

Australia’s dollar was at 80.04 U.S. cents and 78.00 yen from 80.15 cents and 78.04 yen yesterday in New York. New Zealand’s dollar traded at 62.58 U.S. cents and 60.99 yen from 62.71 cents and 61.08 yen in New York.

Crude oil for July delivery gained $1.92 to $70.01 a barrel on the New York Mercantile Exchange, the highest settlement since Nov. 4. Prices have risen about 60 percent this year.

‘Encouraging Sign’

The trade-weighted Dollar Index fell 1.3 percent yesterday to 79.840 after the U.S. government approved 10 banks to buy back $68 billion of government shares. Treasury Secretary Timothy Geithner said in a statement the repayments are an “encouraging sign of financial repair.”

The index, used by the ICE to track the greenback against the euro, yen, pound, Canadian dollar, Swiss franc and Swedish krona, reached this year’s low of 78.334 on June 2.

The yen fell against 12 of the 16 most-active currencies after a government report showed Japan’s machinery orders fell 5.4 percent in April from the pervious month following a 1.3 percent drop in March. The orders, an indicator of capital investment in the next three to six months, were expected to decline 0.6 percent in a Bloomberg News survey of economists.

The Bank of Japan may say in its June economic report that the economy isn’t worsening as fast as in previous months, Nikkei English News reported, without saying where it got the information. The central bank may elevate its view of the Japanese economy when the policy board meets next week as production and export declines stop and economic stimulus programs help, Nikkei said.

Goldman on Euro

Goldman Sachs in a research note yesterday said the euro will rise to $1.45 and the Federal Reserve will refrain from raising the target rate for overnight lending between banks “for a considerable period of time.”

“The timing is now opportune,” Goldman Sachs wrote. “We think the level of growth will remain below trend, and U.S. rates will be kept low for a considerable period of time.”

The dollar rose the most against the euro in five weeks on June 5 after the Labor Department reported that U.S. job cuts slowed to 345,000 in May, the lowest level in eight months.

The employment report raised speculation that the Fed will boost the target lending rate to at least 0.5 percent by the end of the year. Fed funds futures contracts showed median forecast for the yesterday a 45 percent chance of a rate increase by November, compared with 27 percent odds a week ago.

FKLI Commentary on 10/06/09

FKLI futures June contract rebound 8 point higher to close at 1073.5 as compare to previous trading session with total 5,766 lots traded in the market. FKLI rebound during trading as Dow Jones was traded firm despite euro equity indices plunge during overnight trading.

Technically, FKLI seem well holding above the support trend line at 1063 regions and starts to rebound to search for resistance levels. Based on our technical analyst, our opinion suggest FKLI would traded lower in the coming trading session provided resistance levels at 1078 and 1082 regions. Traders were advice to hold short position strictly provided resistant levels must not be violated while be alert around support levels at 1068 and 1060 regions.

FCPO Commentary on 10/06/09

FCPO 3rd month August Futures contract close marginally RM5 higher to close at RM2465 levels as compare to previous trading session with 10,314 lots traded in the market. CPO price was mainly traded sideways during the trading session as crude oil and soybean oil electronic trading was traded without main direction.

Technically, CPO price tried to search for support level during previous trading after manage to rebound 50% Fibonacci retrace levels at RM2504 regions. Based on our technical analyst, our opinion suggest that CPO price would continue to trade lower in the coming trading session where support seen at RM2420 and RM2400 regions. Traders were advice to take profit on the existing short position as rebound activities might anticipate in the coming activities. Resistances levels were seen at RM2500 and RM2540 regions.

Oil Rises as Prediction Recession to End Sparks Equity Rebound

June 9 (Bloomberg) -- Crude oil gained in New York, snapping two days of losses, after a late-day rally in U.S. stocks spurred by Nobel Prize-winning economist Paul Krugman’s prediction the recession will end by September.

American Express Co. and JPMorgan Chase & Co. climbed more than 2.4 percent to lead the Dow Jones Industrial Average higher after Krugman said “there’s some reason to think that we’re stabilizing.” Oil, which has closed above $60 a barrel each session since May 20, touched a seven-month high of $70.32 on June 5.

“Equities did finish the session fairly strongly in the last hour, which might be providing some support to oil at this point,” said Toby Hassall, a research analyst at Commodity Warrants Australia Pty in Sydney. “This $60 to $70 a barrel level is fundamentally reasonable.”

Crude oil for July delivery gained as much as 81 cents, or 1.2 percent, to $68.90 and was at $68.68 on the New York Mercantile Exchange at 10:16 a.m. in Sydney. Yesterday, the contract fell 35 cents, or 0.5 percent, to settle at $68.09. Futures touched a seven-month high of $70.32 on June 5.

Prices rose in electronic trading as equities rebounded. The Standard & Poor’s 500 Index slipped 0.1 percent, after tumbling as much as 1.5 percent, and the Dow added less than 0.1 percent. Krugman, a Princeton University economist, said yesterday he wouldn’t be surprised “if the official end of the U.S. recession ends up being, in retrospect, dated sometime this summer.”

The dollar traded at $1.3899 per euro at 6:19 a.m. in Tokyo, after rising 0.5 percent yesterday and touching $1.3806, the strongest level since May 28.

Inventory Survey

“To keep this uptrend in place we are going to need to see evidence in physical demand recovery and perhaps not too much more strengthening of the U.S. dollar,” Hassall said.

Analysts were split over whether crude-oil stockpiles rose or declined last week. Supplies were probably unchanged at 366 million barrels, according to the median of eight respondents in a Bloomberg News survey. Four analysts forecast a decline and four said there was an increase.

Gasoline supplies probably rose 1.15 million barrels in the week ended June 5 from 203.2 million the previous week, the survey showed. Stockpiles of distillate fuel, a category that includes heating oil and diesel, probably increased 1.05 million barrels from 150 million.

Gasoline for July delivery gained 1.2 cents, or 0.6 percent, to $1.947 a gallon in New York at 10:01 a.m. in Sydney. Yesterday, it slipped 1.86 cents, or 1 percent, to end the session at $1.936.

Price Warning

Crude is poised for a price “spike” amid a lack of new investments, Jeroen van der Veer, chief executive officer of Royal Dutch Shell Plc, said at the Asia Oil and Gas Conference in Kuala Lumpur yesterday.

“The economy will turn, demand will come back and the overcapacity of supply will disappear,” van der Veer said.

Crude-oil prices may average $65 a barrel by the end of 2009 as the global economy begins to rebound, according to Lawrence Eagles, global head of commodities research at JPMorgan Chase & Co.

Futures will average $61 a barrel in New York during the fourth quarter of 2009, according to the median forecast of 35 analysts tracked by Bloomberg News. Prices will average $50 over the April-through-June period, according to the analysts. Crude oil futures have averaged $56.21 so far this quarter.

“You’re really at the weakest point in May,” Eagles said in Kuala Lumpur. “Going forward, you’d expect to see some demand to increase even if the economy stays flat.”

Based on a study of consumption patterns over the past 15 years, demand could climb as much as 3 million barrels a day through December under the best-case scenario, Eagles said.

Brent crude for July delivery rose 16 cents, or 0.2 percent, to $68.50 a barrel on London’s ICE Futures Europe exchange at 10:24 a.m. Sydney time. Futures touched $69.91 on June 5, the highest since Oct. 21.

Gold Falls as Dollar Rally Curbs Investor Demand; Silver Drops

June 8 (Bloomberg) -- Gold slid to the lowest in almost two weeks as the dollar gained, reducing the appeal of precious metals as an alternative investment. Silver also declined.

The U.S. Dollar Index, a six-currency gauge of the dollar’s value, climbed as much as 1 percent after jumping 1.7 percent on June 5, the most in more than four months. Gold, which typically moves in the opposite direction of the currency, slumped 2 percent in New York at the time, the most in about two months.

“The dollar is still going to be the main driver” for gold, Bernard Sin, the head of currency and metals trading at Swiss refiner MKS Finance SA, said by telephone from Geneva. “Any bad news will trigger more selling.”

Gold futures for August delivery dropped $10.10, or 1 percent, to $952.50 an ounce on the New York Mercantile Exchange’s Comex division. Earlier, the price touched $943.80, the lowest for a most-active contract since May 26.

In London, bullion for immediate delivery fell $4.07, or 0.4 percent, to $951.18 an ounce at 8:04 p.m. local time. Spot prices, which surpassed $1,000 on Feb. 20, last week fell for the first week in five.

Silver futures for July delivery fell 43.3 cents, or 2.8 percent, to $14.955 an ounce in New York. The metal still has gained 32 percent this year, while gold still is up 7.7 percent.

“Gold prices could eventually fall toward $930 before rebounding back toward last week’s high at $990,” Tom Pawlicki, an analyst at MF Global in Chicago, said today in a report. “Silver prices could fall toward $14.60 support before rebounding back toward $16.”

Lowered Buy Recommendation

Pawlicki trimmed his recommended “buy” price to $930 an ounce from $950, while maintaining a target of $1,033. “Silver may appear attractive from the long side upon bullish action near the $14.60 level,” he said in the report.

Jean-Marie Eveillard, the senior investment adviser for the $7 billion First Eagle Global Fund, said it is 10 percent to 12 percent invested in gold and gold-mining securities.

“It’s insurance to protect against the fact that current policies by the American government and the Fed are potentially wildly inflationary,” Eveillard said today in a Bloomberg Television interview, referring to the Federal Reserve.

In London’s afternoon “fixing,” the metal declined to $943.75 from $946.50 in the morning fixing. The fixing sets the price used by some mining companies to sell their output.

While stocks fell around the world, the dollar gained on speculation that the Fed will raise interest rates by the end of the year as the economy recovers. The dollar index climbed 1.8 percent last week as gold futures lost 1.8 percent in New York.

Lost Momentum

“Gold gains from here would be difficult unless risk aversion triggers buying in bullion once again,” Pradeep Unni, an analyst at Richcomm Global Services in Dubai, said in a note. “With gold losing its momentum for a test of $1,000, investment in gold-backed exchange-traded funds also slowed.”

Investment in the SPDR Gold Trust, the biggest exchange- traded fund backed by bullion, slipped to 1,132.15 tons as of June 5, the company’s Web site showed.

“We’re not sure a focus on U.S. recovery can continue, as the small signs of recovery have occurred globally, and Fed funds rates are likely to remain low for a long period of time,” MF Global’s Pawlicki said in the report.

FKLI Commentary on 09/06/09

FKLI futures June contract plunge 11 point lower to close at 1065.5 as compare to previous trading session with total 7,346 lots traded in the market. FKLI plunge during the trading session as most of the regional indices and Dow Jones electronic trading plunge despite were opened higher during morning session.

Technically, FKLI forms a bear engulfing formation in the daily chart with significant increment on trading volume. Based on our technical knowledge, daily formation with significant increment on trading volume indicates strong selling signal especially if support levels at 1061.5 and 1051 fails to hold against the selling pressure. We suggest FKLI would continue to trade lower in the coming trading session provided resistance levels at 1076 and 1084 region. Traders were advice to hold short position in the coming trading session while be cautious on rebound signal.

FCPO Commentary on 09/06/09

FCPO 3rd month August Futures contract plunge RM62 lower to close at RM2458 levels as compare to previous trading session with 10,222 lots traded in the market. CPO price was traded lower during trading session as soybean oil and crude oil electronic and overnight trading were trade weak.

Technically, CPO price starts to plunge lower after manage to consolidate 23.6% Fibonacci rebound levels and forms a rising flag in the 15 min price chart. Based on our technical analyst, our opinion that CPO price would trade lower in the coming trading session where resistance levels at RM2532 and RM2620 must strictly not to be violated. Traders were advice to hold short position in the coming trading session while be cautious around support levels at RM2400 and RM2350 regions.

Oil Falls After Gains in Dollar Erodes Appeal of Commodities

June 8 (Bloomberg) -- Crude oil fell for a second day after the dollar traded near the strongest in a month against the yen, reducing the investment appeal of commodities.

Oil declined as the U.S. currency gained the most versus the yen in more than three months on June 5. The relative strength index for crude rose to 68.81 last week from 51.12 at the end of April, indicating prices may be poised to fall.

“The dollar’s rally has pretty significant implications or consequences for the commodity sector overall,” said Toby Hassall, research analyst at Commodity Warrants Australia Pty in Sydney. Inventories remain high and “it’s not surprising to see oil off a little today,” he said.

Crude oil for July delivery fell as much as $1.09, or 1.6 percent, to $67.35 a barrel on the New York Mercantile Exchange. It was at $67.43 at 2:34 p.m. in Singapore.

The contract dropped 0.5 percent to $68.44 a barrel on June 5 as the dollar gained after a stronger-than-forecast U.S. jobs report. Futures touched $70.32 earlier that session, a six-month high, after the Labor Department’s May report showed the fewest job losses in eight months in the world’s largest oil-consuming nation.

Oil’s pull-back from $70 may reflect some “technical resistance” following a very strong rally in the past two months, Hassall said.

“There’s a difference between a real recovery and a reduced rate of decline,” he said. A price of $60 to $70 a barrel probably reflects the improvement seen so far in the global economic outlook, he said.

Relative strength indexes show how rapidly prices have advanced or dropped during a specified time period. Readings above 70 indicate a price may be poised to fall, and readings below 30 indicate it may be poised to rise.

Brent, Dollar

Brent crude for July delivery declined as much as $1.04, or 1.5 percent, to $67.30 a barrel on London’s ICE Futures Europe exchange. The contract was trading at $67.41 at 2:35 p.m. in Singapore.

Oil also fell as output increased, adding to stockpiles. Daily production from the Kirkuk region of Iraq, OPEC’s third- largest producer, climbed 16 percent to 670,000 barrels on new wells and improved security, news agency Aswat al-Iraq reported yesterday.

New York oil futures have gained 38 percent the past two months and 52 percent so far this year as rising equity markets lifted investor confidence and the falling U.S. dollar boosted interest in oil, metals and other commodities.

Shell Comments

Crude is poised for a “spike” amid a lack of new investments, Jeroen van der Veer, chief executive officer of Royal Dutch Shell Plc, said today.

The global energy industry is facing “severe challenges” and the world needs unconventional energy supplies to meet rising demand, Shell’s van der Veer said at the Asia Oil and Gas Conference in Kuala Lumpur.

“The economy will turn, demand will come back and the overcapacity of supply will disappear” van der Veer said.

The dollar traded at 98.41 yen as of 12:22 p.m. in Tokyo from 98.64 on June 5 in New York where it climbed to 98.89, the highest level since May 8. The dollar was at $1.3987 versus the euro from $1.3968.

Oil prices also gained the past month as U.S. stockpiles declined and the nation’s refiners lifted operating rates to a six-month high before the summer holiday driving season. Holiday motoring coincides with the North Atlantic hurricane season June through November, when tanker traffic and sometimes output in the Gulf of Mexico is disrupted.

A low-pressure system in the southwestern Caribbean is unlikely to develop into a tropical cyclone, the U.S. National Hurricane Center said on its Web site.

Palm Oil May Extend Drop on Speculation Indian Imports to Slow

June 8 (Bloomberg) -- Palm oil futures in Malaysia, little changed today, may extend a recent decline on concern that orders from India, the second largest buyer, will slow after the country accumulated record stockpiles.

“With reserves in India at the current level, export numbers in the second half of 2009 may see significant weakening,” said an ECM Libra Investment Research report today.

August-delivery palm oil on the Malaysia Derivatives Exchange dropped as much as 0.8 percent to 2,500 ringgit ($712) a metric ton in Kuala Lumpur. The contract traded at 2,518 ringgit at 11:53 a.m. local time.

Export data from independent cargo surveyor Societe Generale de Surveillance on June 1 showed exports of palm oil to India from Malaysia, the second-largest producer, dropped 26 percent in May from a month earlier, after a 94 percent surge in April, signaling stockpiling has peaked, analysts said.

The next set of export data is out on Wednesday.

The price has surged 49 percent this year as soybean crops declined in Brazil and Argentina and soybean stockpiles in the U.S. are forecast to reach a five-year low. Palm oil competes with soybean oil for applications in food and biofuels.

India may slow the pace of imports after domestic stockpiles surged, Govindlal G. Patel, director of Dipak Enterprise, said on June 2. The country’s cooking oil reserves probably climbed 55 percent to 1.7 million tons in the seven months ended May, exceeding normal levels of 1.1 million tons, he said.