Sunday, December 6, 2009

FKLI Commentary on 071209

FKLI Nov Futures contract traded 0.5 points lower close at 1267 levels as compare to previous trading session to with a total of 2,934 lots traded in the market. FKLI was traded sideways due to regional indices and Dow Jones electronic trading mix reaction during trading sessions.

Technically, FKLI was traded within range from 1265 to 1270 region throughout entire trading days after manage to rebound 50% Fibonacci resistance levels at 1273. Based on our technical view, FKLI was seen engage into correction phase as FKLI seems fails to penetrate resistance levels at 1273.5 and 1279 region. Our opinion suggests FKLI would likely to trade lower in the coming trading session provided resistance levels were not violated. Traders were advice to hold short position while be cautious around support levels at 1262 and 1254 regions.

FCPO Commentary on 071209

CPO 3rd month Feb futures contract surge RM84 points higher as compare to previous trading sessions to close at RM2562 with a total of 10,412 lots traded in the market. CPO price was traded higher during 2nd trading session as soybean oil electronic trading was traded higher due to news released regarding on the lower production expectation as the peak season of high production just ended.

Technically, CPO price seems temporary resisted by 123.6% Fibonacci resistance levels at RM2600 regions after manage to break up from a symmetric triangle formation. Based on our technical view, CPO price would expect to encounter some selling pressure around RM2600 levels. However, CPO price would still seen intact with bull rally provided support levels at RM2510 and RM2463 were violated during trading sessions. Our opinion suggests CPO price would continue to trade higher in the coming trading sessions. Traders were advice to apply long on dip strategy in the coming trading sessions while be cautious around resistance levels at RM2604 and RM2651 regions.

Crude Oil Declines to Seven-Week Low as the Dollar Surges

Dec. 4 (Bloomberg) -- Crude oil fell to a seven-week low as the dollar surged on an unexpected drop in the U.S. unemployment rate, curbing the appeal of commodities to investors.

Prices decreased as the U.S. currency strengthened the most against the euro in more than five months. Oil advanced as much as 1.9 percent earlier in the session after the Labor Department reported that the jobless rate slipped to 10 percent in November. Saudi Arabia’s oil minister said today that “right now the price is OK” and that supplies are falling.

“The jobs report is encouraging and points to improving demand,” said Rick Mueller, a director of oil markets at Energy Security Analysis Inc. in Wakefield, Massachusetts. “Ordinarily, evidence of a stronger economy would be bullish for oil, but the situation is more complicated now. The strength of the dollar has hedge funds selling commodities.”

Crude oil for January delivery fell 99 cents, or 1.3 percent, to $75.47 a barrel on the New York Mercantile Exchange, the lowest settlement price since Oct. 14. Prices declined 0.8 percent this week and are up 69 percent this year.

The improving labor market indicates the deepest U.S. recession since the 1930s may have ended, though it’s too soon to say precisely what month it stopped, Robert Hall, who heads the National Bureau of Economic Research’s Business Cycle Dating Committee, said in an interview. The group is charged with determining when recessions begin and end.

“The employment figures bode well for demand,” said John Kilduff, partner at Round Earth Capital, a New York-based hedge fund that focuses on food and energy-commodity investments. “It’s going to take some time for us to wring out the dollar trade. Once we do, the market will return to trading on the fundamentals.”

Dollar Rally

The dollar rallied on speculation that an improving economy will allow the Federal Reserve to lift interest rates. The greenback traded at $1.4828 against the euro, up 1.5 percent from $1.5053 yesterday. It’s the biggest gain for the U.S. currency since June 15.

“Commodities have been buoyed by the dollar’s weakness,” Kilduff said. “Now that the dollar’s prospects are improving they are taking a hit.

Gold futures for February delivery tumbled $48.80, or 4 percent, to end the session at $1,169.50 an ounce on the Comex division of Nymex. It was the biggest drop for a most-active contract since Dec. 1, 2008. The Reuters/Jefferies CRB Index of 19 commodities declined 1.1 percent to 273.60.

“Right now the price is OK, between $70 and $80, close to the target, almost $75,” Saudi Oil Minister Ali al-Naimi said in Cairo before a meeting of Arab petroleum ministers. Inventories of oil “are coming down,” he said.

OPEC Meeting

The Organization of Petroleum Exporting Countries will review production targets at a meeting in Angola on Dec. 22. The 12-member group kept quotas steady at three meetings this year.

“I don’t think any change will be taking place,” Libya’s top oil official, National Oil Corp. Chairman Shokri Ghanem, told reporters in Cairo. “We are going to call on member countries to stick to levels agreed by OPEC.”

The 11 countries with production quotas pumped 26.5 million barrels of crude oil a day in November, 1.655 million above their collective target, a Bloomberg News survey showed. Output from all 12 members, including Iraq, rose to the highest level in 11 months.

“Any change in production targets at the Dec. 22 meeting is looking unlikely,” said Tom Bentz, a senior energy analyst at BNP Paribas Commodity Futures Inc. in New York. “Meanwhile, output continues to rise a bit each month. With prices at this level, they feel comfortable leaking more oil onto the market.”

Nigerian Output

Nigeria is among the countries that are flouting their official limits the most. Africa’s biggest producer boosted oil production to 2.6 million barrels a day, from 2.4 million last week, Emmanuel Egbogah, a presidential adviser, told state-owned NTA television today. That’s about 900,000 barrels a day more than its OPEC allocation.

“If the Nigerians are really pumping 2.6 million barrels a day, it would be very bearish for the market,” Mueller said. “They have never had the best record of compliance. This could lead to some sharp words at the next OPEC meeting.”

Brent crude oil for January settlement declined 84 cents, or 1.1 percent, to end the session at $77.52 a barrel on the London-based ICE Futures Europe exchange. Brent settled $2.05 higher than New York oil, the biggest premium since Aug. 19.

Oil may decline next week on speculation fuel inventories are sufficient to meet demand, a Bloomberg News survey showed. Twenty-one of 41 analysts and traders, or 51 percent, said futures will drop through Dec. 11. Five respondents, or 12 percent, forecast the market will rise, and 15 said prices will be little changed.

Oil volume in electronic trading on the Nymex was 646,779 contracts as of 3:05 p.m. in New York. Volume totaled 650,285 contracts yesterday, the most since Nov. 12 and 13 percent more than the average of the past three months. Open interest was 1.22 million contracts.

Dollar Rises Most Since 1999 Versus Yen as Fed Bets Increase

Dec. 5 (Bloomberg) -- The dollar posted its biggest gain since February 1999 against the yen as a better-than-forecast non-farm payrolls report encouraged traders to boost bets on Federal Reserve interest rate increases.

The yen fell this week against all of its 16 major counterparts on speculation Japan’s currency will regain its status as the primary funding vehicle for higher-yielding investments. The euro dropped against the Mexican peso and Polish zloty as demand increased for riskier assets that offer more returns. The Fed holds its last policy-setting meeting of the year on Dec. 16.

“What the job numbers do is firm up expectations that the Fed interest-rate hike is coming,” said Camilla Sutton, a strategist in Toronto at Bank of Nova Scotia, the nation’s third-largest lender. “That should be a strong-dollar story.”

The dollar rose 4.7 percent to 90.56 yen this week, the biggest gain since the five-day period ended Feb. 19, 1999, when an unexpected narrowing of the U.S. trade deficit fueled optimism that the economy would expand. The U.S. currency appreciated 0.9 percent to $1.4858 per euro from $1.4988. The euro advanced 3.8 percent to 134.54 yen from 129.67.

Futures on the Chicago Board of Trade showed a 53 percent chance yesterday that the Fed will raise the target lending rate by at least a quarter-percentage point by the June meeting, up from 31 percent a week earlier.

Employers eliminated 11,000 jobs in November, the fewest since the recession began, the Labor Department reported yesterday. The median forecast of 82 economists in a Bloomberg survey was for a reduction of 125,000 jobs. The unemployment rate decreased to 10 percent.

‘Speaks for Itself’

“This number speaks for itself,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman & Co. in New York. “High-yielding currencies are doing well. Poland is doing well in Eastern Europe.”

The Dollar Index, which IntercontinentalExchange Inc. uses to track the greenback against the currencies of six major U.S. trading partners, rose 1.2 percent this week to 75.911, the biggest gain since June. It gained 1.7 percent yesterday, erasing what had been a weekly drop.

The gauge has fallen about 19 percent from a three-year high reached in March, dropping on speculation that the Fed would be slow in raising borrowing costs.

The last time the Dollar Index rose the day a payrolls report exceeded expectations was on Aug. 7, when it climbed 1.2 percent. Employers eliminated 247,000 jobs in July, compared with the median forecast of 325,000.

Canada’s Currency

Canada’s currency advanced 0.4 percent to C$1.0580 versus its U.S. counterpart, paring its gain this week as crude oil and gold tumbled. It rallied earlier yesterday as much as 1.3 percent on the nation’s job gains last month.

Poland’s zloty climbed 2.3 percent to 4.0616 versus the euro this week, the biggest advance since Nov. 13. The Mexican peso gained 3 percent to 18.8185 per euro. Australia’s currency rose 5.6 percent to 82.83 yen. New Zealand’s dollar advanced 5.4 percent to 64.87 yen.

“Canada should do better, Aussie and kiwi should do better,” said Daniel Janis, who oversees $3.6 billion in global bonds and currencies as portfolio manager at MFC Global Investment Management in Boston. “If you have the monster gorilla starting to do a little better, wouldn’t that be better for world growth and world trade?”

Luxembourg’s Jean-Claude Juncker, who heads the group of euro-area finance ministers, said the euro is “clearly overvalued” against the dollar and yuan.

Juncker on Yuan

“We urged the Chinese to let the yuan appreciate versus the euro because in the long term, it’s not possible that the economy, which grows at the fastest pace in the world at the moment, constantly depreciates” its currency, Juncker said at a press conference in Luxembourg yesterday. “We want to change this situation as fast as possible.”

The yuan has traded at about 6.83 per dollar since July 2008 after a 21 percent gain in the previous three years. The link of the yuan to the weakening dollar has pushed the Chinese currency down 13 percent versus the euro over the past year, adding to pressure from China’s export competitors to let the yuan appreciate.

European Central Bank President Jean-Claude Trichet took a step on Dec. 3 toward removing emergency stimulus measures designed to end the recession, telling reporters in Frankfurt the need had diminished. The main refinancing rate stayed at a record low 1 percent.

ECB Stimulus

The central bank will link the rate on its last 12-month tender on Dec. 15 to the average of its benchmark over the year, instead of charging a fixed 1 percent as it did in previous offers, Trichet said. The final six-month operation will be held in March, he said.

The Bank of England will probably hold its main rate at a record low 0.5 percent at its meeting on Dec. 10, according to all of the 52 economists in a Bloomberg survey.

The yen gained 4.3 percent versus the U.S. currency in November, helping to erode profits of exporters including Sony Corp. and Toyota Motor Corp. It reached a 14-year high of 84.83 against the dollar on Nov. 27.

Japan’s Vice Finance Minister Rintaro Tamaki met with U.S. Treasury officials this week in Washington, spurring speculation the two nations are discussing how to cap the yen.

“It would be good for the yen to weaken a little more,” Japanese Deputy Prime Minister Naoto Kan said in Tokyo yesterday.