Forex Trading

KARACHI: State Bank said that the long-term investment facility for the furniture and pharmaceutical sectors� plants and machineries could be availed of. State Bank of Pakistan (SBP) has decided that the plants and machineries for export items projects in furniture and pharmaceutical sectors in future would be entitled to avail of the facility available under long-term investment. SBP has issued directives to the chiefs of all the banks and development financial institutions to this effect.

KARACHI: Cotton market trading activities remained insignificant, as like other sectors of the economy hit by the political situation in the country, further aggravated on long march and sit-in that led to the requisition of containers inflicting billions of rupees loss to the textile industry and exporters, who could not ship their cargo. The traders preferred remaining cautious, but the market pundits hope that with the change in situation on restoration of CJ Iftikhar trading activities would gradually pick up.

KARACHI: Stock markets in the country also went boom, boom, following the wave of jubilations and the brightening possibility of a new era of peace and prosperity on the historical decision of the government leading to the restoration of all deposed judges. The bourses at the very onset shedding all fears and apprehensions went upbeat, as the traders hailing the government decision leading to the restoration of judges went on jolly good trading, which sent the largest sock market in the country KSE in positive zone, while the KSE-100 index was seen persistently recoding gains, which saw it at one moment surging by over 300 points and breaching the 6000 psychological barriers. KSE all registered companies� shares prices recording an increase by 5 percent. On the other hand, Lahore and Islamabad stock exchanges hilariously welcoming the restoration of chief justice went on trading with positive mind, which saw the indexes soaring up and up.

SINGAPORE: World oil prices retreated in Asian trade Wednesday after topping a two-month high above 49 dollars overnight on concerns over weak global energy demand amid the economic downturn, analysts said. New Yorks main futures contract, light sweet crude for delivery in April, fell 65 cents to 48.51 dollars a barrel in morning trade. It had jumped 1.81 dollars in New York trade Tuesday to close at 49.16 dollars after hitting 49.82, its highest level since January 6. Brent North Sea crude for May delivery was down 47 cents to 47.77 dollars. The April contract expired Monday at 43.98 dollars. "Demand is still the key. Yet we still have to see the demand for oil and natural gas increase before we get too excited about a change in trend," said Phil Flynn of Alaron Trading in the United States. "Oil demand in the US is weak and we need to see that change... If oil closes above 50 dollars a barrel we may need to start getting a bit bullish." The market was also waiting for the release later Wednesday of the weekly US energy inventories report, which is closely watched because the United States is the worlds biggest oil consumer. Analysts said speculation that the Organisation of Petroleum Exporting Countries (OPEC) would slash production during their next meeting in May should support prices. OPEC, which pumps about 40 percent of the worlds crude, opted at their last meeting Sunday in Vienna to leave production quotas unchanged.

LONDON: The restoration of judges is a positive step taken due to the presence of the democratic government. Following restoration of judges in Pakistan, Moody�s Investors Services� analyst, Ananda Mitra in his report said that it would be premature to say how far the restoration of judges would bring about political harmony in the country. The report said that Pakistan could also witness fall in foreign remittances and foreign investment due to global downturn, however Pakistan could benefit from the long-term investment strategy of the Chinese and Gulf States� investors. The report further said that political instability could further aggravate Pakistan�s economic situation.

Looking at recent situation it’s difficult to see if we can still take US Treasuries as the risk-free assets or not. Apparently the safe-haven position that has advocated the world’s most liquid currency for almost 8 months currently is beginning to confront struggle. Growth predicts for the US keep on reducing as policy attempts dropped short of a consumer and credit-led force in economic movement. On the contrary, the FX market’s distinctive high yielders are in fact finding economic projections that indicate a fast revival. It is making these currencies gainful for both their sound fundamentals and relatively high return. But sentiment after expansion projections and sentiment according to liquidity come under 2 very diverse states of anxiety and risk.

In 1967, a Chicago bank rejected to provide pound loan to a professor named Milton Friedman, because his purposed was to use this fund to sell short the British pound. Mr. Friedman realized excessively that the price ratio from the British pound to US dollar at that time was high, he wanted first to sell the British pound, after the British pound fell he buys back the British pound to repay the bank again. This family bank rejects the loan offer based on the "Bretton woods Agreement" which was established 20 years ago. This agreement has fixed the various countries' currency to US dollar exchange rate, and the price ratio between the U.S dollar and the gold is also fixed to 35 US dollars to each ounce of gold.

The Bretton Woods Agreement was signed in 1944, the purposed was to prevent the currency to escape between countries, and also to limit the international speculation, thus to stabilize the international currency. Before this agreement was signed, the gold remittance standard system which was widely used since 1876 - was leading the international economy system until the First World War. In the gold remittance system, the currency was at the stable level under the support of the gold price. The gold remittance system has abolished the old time king and the ruler which depreciates the currency value unlawfully, which will lead to inflation.

But, the gold remittance standard system is certainly imperfect. Along with a country economic potentiality enhancement, it can import massive products from overseas, until it exhausts the gold reserve of certain country. It resulted the supply of the currency reduces, the interest rate raises, the economic activity will start to decline until it reaches the recession limit. Finally, the commodity price falls to the valley, gradually attracts other countries to stream in, massively rushes to purchase this country commodity. This will pour gold into this country, this will increase this country currency supplies quantity, and it will reduce the interest rate, and will create the wealth. This is so called the "the prosperity - decline” pattern and is the circulation of the gold remittance standard system, until the trade circulation and the gold freedom was broken by the First World War.

After several catastrophes wars, the Bretton Woods agreement has appeared. The countries which signed the treaty agreed to maintain the domestic currency to US dollar exchange rate, as well as the necessity of the corresponding ratio of the gold, and only allow a small fluctuation. Countries are prohibited to depreciate the currency value for the gain trade benefit, only allows the country to depreciate not more then 10%. Enters the 50's, the continuous growth of the international trade causes the fund large-scale shift which produces because of the postwar reconstruction, this causes Bretton Woods system which establishes the foreign exchange rate to lose stability.

This agreement was finally abolished in 1971, US dollar no longer could convert to gold. Until 1973, each major industrialized nation currency exchange rate fluctuation has been more freely, mainly regulates by the foreign exchange market through the currency supplies and demand quantity. The business volume, the transaction speed as well as the price variability, have achieved a comprehensive growth in the 1970's, come along with the emerge of price ratio fluctuation, the brand-new financial tool, then only the market liberalization and the trade liberalization could be achieved.

In the 1980s, along with the published of the computer and correlation technology, the international capital has flow rapidly, and strongly related the Asia, Europe and America market. Foreign exchange business volume from 80's rises daily from 70 billion US dollars to 150 billion US dollars after 20 years.


European market inflation
One of the reasons why the foreign exchange developed rapidly was the rapid development of the Euro dollar market. In a Euro dollar market, US dollar is stored beyond the border of America banks. Similarly, the European market is refers to property depositing outside the currency rightful owner country market. A Euro dollar market was formed at first in the 50's, at that time Russia deposited its petroleum income beyond the US border, avoid being freeze by the US government. This has formed a large offshore US dollar national treasury which is beyond the control of the US government. The American government has formulated a law to prohibited US dollar from lending money for the foreigner. Because the degree of freedom of the Euro dollar market is bigger and the rate of return is bigger, therefore it has large attraction. Starting from the 80's, the American company starts to borrow loan from the offshore market, they discovered that the European market is a wealth center which consists of large amount of floating capital which could provide short-term loan.

London once was (until now still is) one of the main offshore market. In the 80's, the Bank of England in order to maintain its global finance industry center dominant position, using US dollar as England pound substitution to make loan, thus to become a Euro dollar market center. London's convenient geographical position (is situated between Asian and Americas market) also helps to maintain the European market as the dominant position.

US dollar price action was mainly to blame for much of what occurred over the forex markets on Wednesday, as the DXY index at last broke under severe trend-line support, indicating the currency is officially spinning below. There was not much in the way of fundamental news for the US, but that is going to be different on Thursday as the Commerce Department is predicted to reveal that US retail sales drop negative for the 7th time throughout the last 8 months in February, as worsening labor markets, tight credit situations, and a year-long depression influence badly on the minds of consumers. More particularly, advance retail sales are expected to have contracted 0.5 % throughout the month, and keeping out auto sales are predicted to have drooping 0.2 %, marking what might result in being a steady trend throughout the 1st half of 2009.

March 18 (Bloomberg) -- The Bank of Japan will increase its purchases of government bonds from banks in addition to extending subordinated loans to lenders as it widens efforts to counter the deepening recession.

The central bank will buy 1.8 trillion yen ($18.3 billion) of government debt each month, up from 1.4 trillion yen, it said in Tokyo today. Last night, the BOJ outlined plans to offer banks as much as 1 trillion yen in subordinated loans.

The purchases may help to contain bond yields and enable the world’s most indebted government to pay for Prime Minister Taro Aso’s third stimulus package. The Bank of England last week started buying U.K. government bonds and the Federal Reserve may unveil a similar program later today.

“At a time when the country’s economy is shrinking at a double-digit pace, fiscal spending is the remedy, and the central bank can contribute by buying government bonds,” said Hiroaki Muto, a senior economist at Sumitomo Mitsui Asset Management Co. in Tokyo. “The bank can’t avoid entering the field of fiscal policy.”

The yield on Japan’s 10-year bond was unchanged at 1.3 percent at 5:47 p.m. in Tokyo, and earlier touched 1.285 percent, the lowest in more than a week. It’s still higher than the 1.165 percent at the start of the year. The yen traded at 98.65 per dollar from 98.48.

Governor Masaaki Shirakawa said expanding the central bank’s supply of longer-term funds to the economy will help to “keep financial markets stable beyond the fiscal year end.”

Long-Term Rates

The increase in debt purchases was “favorable and stabilized long-term interest rates regardless of growing concerns over excessive supply,” said Susumu Kato, chief economist at Calyon Securities in Tokyo.

Bank shares rose on the plan to buy subordinated debt, helping the Nikkei 225 Stock Average climb 0.3 percent. Mizuho Financial Group Inc., Japan’s second-largest lender, jumped 3 percent. Sumitomo Mitsui Financial Group Inc., the third biggest, advanced 3.4 percent.

Japanese banks traditionally have large equity holdings, making them vulnerable to the Nikkei’s 31 percent drop over the past six months and reducing their ability to lend.

In the U.S., Fed purchases of government debt are hardly a done deal. At least three of the 17 top Fed officials want to buy Treasuries or target the supply of money, while Chairman Ben S. Bernanke has favored reviving specific credit markets.

Stimulus Package

Aso last week said he’d draft a new spending package to add to the 10 trillion yen pledged since he became Japan’s leader six months ago. The world’s second-largest economy shrank at an annual 12.1 percent pace last quarter as Toyota Motor Corp. and Sony Corp. cut output and fired workers after an unprecedented drop in exports.

Shirakawa stressed that the bank increased the debt purchases to shore up financial markets and not to fund fiscal expansion. “It would be dangerous to use the government bond- buying operations as a financing tool,” he said.

“Whatever the Bank of Japan argues officially, there’s no doubt that the bond purchase increase is aimed at easing strong concern in the bond market that the government will have to sell more debt,” said Yasunari Ueno, chief market economist at Mizuho Securities Co. in Tokyo.

The Bank of Japan has been buying government bonds since 1989 and increased the purchases in December to 1.4 trillion yen a month from 1.2 trillion yen. Shirakawa said the central bank has “very limited room” to expand them further.

Largest Public Debt

Japan’s public debt is more than 170 percent of gross domestic product, the Organization for Economic Cooperation and Development estimates, the highest in the industrialized world. By comparison, the U.S.’s debt will rise to 78 percent of GDP this year and Italy’s will reach 114 percent, the OECD says.

The Bank of Japan kept its benchmark overnight lending rate at 0.1 percent at today’s meeting. Since cutting the rate in December, the central bank has turned to buying assets from financial institutions in an effort to encourage lending.

Shirakawa said the central bank won’t seek government guarantees of losses it might incur should financial institutions be unable to repay the subordinated loans. The central bank would be have to line up behind other creditors should a lender go bankrupt.

In January, the BOJ started buying commercial paper to improve companies’ access to short-term funding. Last month it extended the asset-purchase program to one-year corporate bonds as well as stocks owned by banks.

The asset-buying policy has expanded the amount of money in the economy and is “quantitative easing in all but name,” according to Julian Jessop, chief international economist at Capital Economics Ltd. in London.

The Bank of Japan avoids describing the steps as quantitative easing, which in the past referred to its 2001- 2006 policy of setting a target for reserves that commercial banks hold at the bank.

LAHORE: Economists hope now that the political temperatures have cooled down the government would shift its attention to reviving economy. They say that the do nothing and hope for the best approach has put the economy in recession.

Factors including high interest rates, inflation, energy cost, falling exports, falling rupee value and rampant corruption need immediate government attention, economists say.

All these factors are inter related. Reining in inflation, for instance, would lower interest rates and commodity rates. Boosting exports would stabilise the rupee and reduce current account deficit.

Senior economist Naveed Anwar Khan, FCA, says that the type of inflation prevailing in Pakistan could only be controlled through close cooperation with the provincial governments.

He said there is no effective check on prices. The rates of petroleum products, for instance, have declined locally by 30 per cent but the rates of lubricants like engine oil and transmission oil are still at their peak levels because there is no authority to regulate the rates of these items.

Naveed says the retail prices of fruits and vegetables are fixed 30 to 40 per cent higher than their auction price at the fruit and vegetable markets. The federal government, he added, would have to facilitate the provincial governments in eliminating the role of middlemen that engineer high commodity prices.

Certified Public Accountant Asif Ali Shahid says that the central bank has failed to force banks to give realistic interest rates to the depositors that resulted in a drastic reduction in national savings.

He says despite providing low interest rates to the depositors the banks charge high mark up from the entrepreneurs who finally stopped borrowing resulting in low GDP growth.

He says the high banking spread benefited the financial institutions only while the labour intensive industries caved in due to high cost of borrowing rendering large number of workers jobless. He says the banking spread of seven per cent is too high.

Dubai based chartered accountant Faisal Qamar says that though the exports are suffering in other regional economies as well due to global recession, the textile exports from India, China and Bangladesh have increased by five, six and four per cent respectively while that of Pakistan have declined by over eight per cent during the past eight months.

Yunus Kamran, FCA, says that despite constant inflow of borrowed dollars the rupee is losing value. He said the foreign credits would not be available for an indefinite period. He said Pakistan would have to curb its imports and boost exports to ensure a stable currency vital to attract long term foreign investment.

Courtesy: The News

LONDON: Oil rose above $48 a barrel on Tuesday, testing the top end of a trading range it has held so far this month, ahead of United States inventory data expected to show a build in crude oil stocks.

Data from industry group the American Petroleum Institute (API) at 2030 GMT will be closely watched later on Tuesday as a preliminary Reuters poll showed analysts forecast a 500,000 barrel increase in domestic crude stocks last week.

US light crude for April delivery rose $1.13 to $48.48 a barrel by 1638 GMT. The contract had settled $1.10 higher at $47.35 on Monday. April crude oil options expire at the end of the day trading. London Brent crude added 82 cents to $47.28.

Oil prices are very much linked to equity markets and economic data at the moment, but we are still really sideways trading in the same range we have been in for some time, said Christopher Bellew, oil broker at Bache Commodities.

The US housing market, seat of fires now ravaging the world economy, showed unexpected signs of life on Tuesday, but analysts warned against any hasty predictions of a sustained recovery.

On Monday, data showed US credit card defaults rose in February to their highest level in at least 20 years, undermining hopes of bank stability. Data on Monday also showed industrial output in the US in February plummeted to its lowest level in almost seven years, serving as a stark reminder that the 14 month long recession was far from over.

KARACHI: Industrialists have urged the government to immediately install rental power plants in order to properly deal with the energy crisis, which is hampering industrial production in the country.

The government should immediately bring in rental power systems and provide electricity for the energy starved industry, otherwise coming summer would be very fretful for both commercial and domestic consumers.

Naeem Ilyas Khanani, patron in chief and founder chairman of Port Qasim Association of Trade and Industry (PQATI), told The News that current shortfall of 500 megawatts in the city owing to the closure of Bin Qasim power plant, made the industry suffer a lot.

He said the Karachi Electric Supply Corporation (KESC) is not utilising its full production capacity despite a visible fall in international prices of furnace oil.

Moreover, unscheduled load shedding has severe fallout for industrial production which can easily be tackled. The government has been reiterating since last 12 months that rental power plants would be installed to deal with the energy problem in the short term but nothing has been done so far in that regard.

We request the government to instantaneously bring in rental power plants to feed the industry; if not, then this summer will be devastating for the industrial production, he said.

M A Jabbar, Chairman SITE Association of Industry (SAI), said load shedding was the result of circular debt which has to be taken care of. Shaukat Tarin, Adviser to the PM on finance, had repeatedly mentioned tackling of energy crisis by resolving the problem of circular debt during his visit to Karachi. The KESC retains 1,200MW capacity, which shows that the KESC has enough installed capacity which is not being utilised. The KESC intends to use gas instead of oil, one of many problems why power production falls short in Karachi. The government should pressurize the KESC to increase and deploy its full power production capacity, he said. In addition, the government should notice that the KESC is violating its own commitments by not investing in power generation to scale up the current production capacity. Moreover, rental power plants are the only viable option for fast track process to grapple with current power crisis. Investment comes where investment is secure and infrastructure is sound; investors are very sensitive to the political instability in Pakistan; our country is severely hit my terrorism, militancy, and various other problems.

The government should take concrete measures to stabilize its economy for short and medium terms, he urged. Industries in Pakistan are closing down owing to serious crises including high interest rates, power shortage and high cost of production. Moreover, today there are some 10 to 20 per cent industries only in SITE industrial zone which are on the verge of closure, he observed.

Mian Zahid Hussain, Chairman, Korangi Association of Industry (KATI), said power shortage is a big issue for the industry. He said: Tarin had taken us into confidence that the government would deal with the energy crisis on priority in his meetings with our association.

ISLAMABAD: Islamabad will take up with US authorities concerned the reimbursement of $1.2 billion war against terror bill borne during May, 2008 to March, 2009, on the sidelines of IMF Executive Board meeting due in Washington from March 25 to 27.

Advisor to Prime Minister on Finance Shaukat Tarin told The News in an exclusive talk: we will ask the US administration to immediately clear the dues amounting to $1.2 billion (Rs 95 billion).

Tarin said, Pakistan is experiencing financial constraints and if the said amount gets reimbursed, Pakistan would be at ease to achieve the target of 4.2 percent fiscal deficit set under the IMF bailout package.

Coming to IMF Executive Board meeting, he said: I would also place the formal request with Fund seeking the additional $4.5 billion other than $7.6 billion loan under the SBA (stand by arrangement).

To this effect, Pakistan would be seeking enhancement of IMF funding quota from five times to eight in the IMF Executive board meeting. And in case the IMF increases Pakistan quota to eight times, Islamabad would be having additional $4.5 billion in foreign reserves under the stand by arrangement.

Ukraine and Iceland had been given the eight times quota funding so Pakistan would follow the suit to this effect, said Tarin.

The executive board meeting will also approve the second tranche of $840 million from International Monetary Fund (IMF) under 23 months $7.6 billion loan. Pakistan was to get $750 million as second tranche, but now would receive $840 million because of the upward fluctuations in exchange rates against the special drawing rights (SDR).

To a question, Tarin said that the government and a consortium of major commercial banks would strike the deal by end of the current month for generating Rs98 billion in a bid to erase the circular debt that is affecting the smooth running of energy sector. He said that the government requires Rs80 billion net to resolve the circular debt in energy sector.

He disclosed that the whole details of the projects which are to be marketed in Friends of Pakistan meeting to be held in Tokyo on April 17, will be provided to the ambassadors of the member countries of FoP so that respective countries could have ample time to identify the areas in the projects on which they intend to provide funding.

Sun Microsystems Inc. surged in German trading after the Wall Street Journal reported International Business Machines Corp. is in talks to buy the company for at least $6.5 billion.

Sun Microsystems jumped as much as 61 percent to 6 euros at 9:12 a.m. in Frankfurt. The offer would value Sun’s stock at more than double the closing price of $4.97 in the U.S. yesterday, the Wall Street Journal reported, citing people familiar with the plan. An agreement may not be reached, the newspaper said.

An acquisition of Sun Microsystems would bolster IBM’s Internet, data storage, government and telecommunications business, the newspaper said, citing the people.

In recent months, Sun Microsystems has contacted a number of technology companies with the aim of being acquired, people familiar with the matter said, according to the newspaper. Hewlett-Packard Co. declined the offer, the newspaper reported, citing a person briefed on the matter.

March 18 (Bloomberg) -- Federal Reserve policy makers will likely determine today that the U.S. recession is still deepening, while clashing on what to do about it.

Officials will debate how to provide further stimulus to the economy, from purchasing more mortgage bonds to buying Treasury securities. They’ll also keep the benchmark interest rate as low as zero percent, according to all 71 forecasters in a Bloomberg News survey.

At least three of the 17 top Fed officials want to buy Treasuries or target the supply of money, while Chairman Ben S. Bernanke has favored reviving specific credit markets. Central banks worldwide are grappling with how to set policy when rates are near zero; the Bank of England started buying government debt this month, and the Bank of Japan said today it would increase its purchases of sovereign bonds.

“There are big philosophical differences” among Fed policy makers, said Ethan Harris, co-head of economic research at Barclays Capital Inc. “Bernanke is on the very activist side, believing in active, aggressive policies. There are others who think policies should be much more limited, with minimal disruption in the operations of the free market.”

The Fed’s Open Market Committee is scheduled to issue its statement around 2:15 p.m. today in Washington.

The Fed staff, in preparation for the FOMC meeting, probably downgraded its economic forecasts from the prior meeting on Jan. 28, when policy makers predicted unemployment would peak in the fourth quarter as low as 8.5 percent.

Bernanke Warned

Bernanke warned last week the jobless rate may rise beyond 10 percent. His comment underscores the need for the Fed to step up purchases of assets and begin reversing the $400 billion contraction in its balance sheet since December, analysts said.

According to the “Taylor Rule” devised by Stanford University Professor John Taylor suggesting how a central bank should set interest rates if inflation or growth veer from goals, the need for stimulus would justify cuts in the federal funds rate by the end of 2009 to minus 7.5 percent, Laurence Meyer, vice chairman of Macroeconomic Advisers, said in a note to clients. Such a move is logistically impossible.

“We know we need more stimulus,” said Stanford University economist Robert Hall, who heads the National Bureau of Economic Research’s committee that dates the start and end of U.S. recessions. The Fed would “stimulate spending” by expanding its purchases of privately sold assets like housing agency securities, he said. “So we should push in this direction until we get the economy moving again.”

The FOMC statement may highlight the increased risks to the economy following the loss of 651,000 jobs in February, bringing the total since the recession began to 4.4 million.

‘Downside Risks’

“There will be downward revision in growth and an increase in the downside risks,” said Mark Gertler, a New York University economist and research co-author with Bernanke. “The wording will be expand the balance sheet as necessary to moderate credit conditions. They will suggest they will be very aggressive.”

Policy makers have disagreed on just how to be more aggressive. They have at least three options: increase the $1 trillion Term Asset-Backed Securities Loan Facility aimed at restoring consumer and business lending; expand purchases of mortgage-backed securities and agency securities; or begin purchasing long-term Treasuries.

Third Option

The argument for the third option gained ground with “the success the Bank of England has had in lowering long-term rates” by purchasing U.K. government bonds known as gilts in a program announced this month, said Lyle Gramley, a former Fed governor.

The 10-year gilt yield slid to the lowest level in at least 20 years after the Bank of England started buying gilts in a “quantitative easing.” The policy is intended to reduce interest rates and help pull the economy from its first recession in 17 years.

In Japan, 10-year bonds yields fell to the lowest in more than a week after the central bank said it would increase its monthly purchases of government debt to 1.8 trillion yen ($18.3 billion) from 1.4 trillion yen now.

Richmond Fed Bank President Jeffrey Lacker and Philadelphia Fed President Charles Plosser have urged the Fed to preserve neutrality and leave credit programs to the U.S. Treasury Department. Lacker dissented at the FOMC meeting in January, preferring to expand the balance sheet with purchases of Treasury securities.

Monetary Base

St. Louis Fed President James Bullard said in a Feb. 17 speech that policy makers should avert deflation by increasing the monetary base, the total money in circulation plus reserve deposits at central banks. He distinguished between such efforts and the Fed’s emergency programs expanding liquidity.

Bernanke, Vice Chairman Donald Kohn and a majority of the FOMC have said some help to markets for consumer and auto loans and other credit markets is essential for reviving investor demand.

The so-called TALF “should still provide substantial support to auto loans, and therefore to help the customers of the auto companies to be able to purchase vehicles,” Bernanke said Feb. 25 to the House Financial Services Committee.

That program is off to a slow start. Last week, the Fed delayed by two days until tomorrow the deadline for submissions of proposed packages of debt that investors can buy with Fed financing. Brokers and investors have had difficulty agreeing over contract terms, according to participants in the preparations.

That could leave increased purchases of mortgage-backed securities as an attractive option, said Robert Mellman, an economist at JPMorgan Securities Inc. in New York.

March 18 (Bloomberg) -- A $1.3 billion package of securities backed by Nissan Motor Co. auto loans became the first small piece of what Federal Reserve officials say may grow into a $1 trillion effort to unfreeze business and consumer lending.

Nissan’s planned bond sale marks the debut of the Fed’s Term Asset-Backed Securities Loan Facility, or TALF. The securities will likely price on March 19, the deadline for investors to apply to the Fed for loans to buy the debt, according to a person familiar with the sale who declined to be identified because terms aren’t set.

The Obama administration is counting on the TALF plan to help end the credit crunch and recession, thawing the market for asset-backed securities so lenders can make new loans to consumers. The program, first announced in November, was hampered by delays as investors, dealers and issuers worked on details.

“A number of people were concerned that some glitches might not have been ironed out this week” in time to meet the first deadline for investors to apply for the Fed loans, said Malcolm Dorris, a senior partner in the securitization group at law firm Dechert LLP in New York. “Getting a deal done in March is good for the program. We are still in the wait-and-see stage.”

Investors have shunned debt backed by consumer loans as unemployment has climbed in the worst financial crisis since the Great Depression. Sales of the bonds plunged 40 percent last year to $106 billion, according to data compiled by Bloomberg, choking off funding to lenders. About $2.3 billion of debt backed by auto loans has been sold this year, compared with more than $9.6 billion in the same period of 2008, according to data from JPMorgan Chase & Co.

Spreads Soar

Central bankers and Treasury haven’t been able to meet Fed Chairman Ben S. Bernanke’s goal of reducing consumer interest rates along with the borrowing costs paid by banks. The difference between rates on 30-year fixed mortgages and 10-year Treasuries was 2.1 percentage points as of yesterday, Bloomberg data show. That’s up from an average of 1.75 percentage points in the decade before the subprime mortgage market collapsed.

The extra yield relative to benchmark interest rates that investors demand to own debt backed by consumer loans has soared amid concern that defaults will climb. Top-rated bonds backed by auto loans are trading at about 300 basis points more than the one-month London interbank offered rate compared with 65 basis points in January 2008, JPMorgan data show. One-month Libor, a borrowing benchmark, is currently 0.56 percent.

AAA Rated

The first phase of the TALF will finance the purchase of as much as $200 billion of AAA rated securities containing loans for autos, education, credit cards and small businesses. Officials eventually plan to include other assets, including commercial mortgage-backed securities.

The Fed originally planned to start the TALF in February, then delayed the debut to ensure “all our legal and procedural steps had been taken,” Bernanke said in congressional testimony Feb. 25. On March 3, the Fed and Treasury said applications for the first deals would be due in two weeks, with loans disbursed on March 25.

The largest AAA portion of the Nissan sale maturing in 1.98 years may price to yield between about 185 basis points and 200 basis points more than benchmark interest rates, the person said. JPMorgan and Bank of America Corp. are underwriting the bonds.

Tokyo-based Nissan sold more than $3 billion of debt backed by auto loans last year, Bloomberg data show. Other auto finance companies, including World Omni Financial Corp., have indicated they plan to access the TALF. The Deerfield Beach, Florida-based lender filed a prospectus with the U.S. Securities and Exchange Commission on Jan. 12 to sell securities backed by auto loans.

The New Zealand dollar propelled to the monthly high against the U.S. dollar today, rising for the second day, as the stock marked continued to grow globally, improving the appeal of the higher yielding currencies.

The Australian counterpart of the NZD also rose today against the other major currencies but not at such a fast pace as the New Zealand dollar. The commodity price also went up significantly yesterday, increasing the competitiveness of the regional exporting economies. Yesterday the Reserve Bank of New Zealand decreased the official cash rate to the record low 3 percent (from 3.5 percent) and said that the rate reduction pace will slowdown.

The New Zealand currency also rose for a second day against the Japanese yen, reaching the 2-month high against it, as the risk-aversion declined significantly yesterday on the global economic optimism. The kiwi (as the NZD is sometimes called) advanced for the fourth day against the Aussie today.

Some analysts believe that it’s only a temporary correction from the pessimism that ruled the markets during the last several months. Banks’ shares are rising so are the other equities and it’s natural for the investors to dump the low-yielding yen and dollar for the more promising currencies. The short-term outlook for the Australian and New Zealand dollars is bullish.

NZD/USD rose 0.5184 to 0.5241 as of 9:18 GMT today after reaching as high as 0.5266 — the highest level since February 13. NZD/JPY went up from 50.64 to 51.52 with a daily maximum at 51.84 — the highest since January 12. AUD/NZD fell from 1.2555 to 1.2546 with the daily minimum at 1.2499 — the lowest level since February 19.

March 18 (Bloomberg) -- China rejected Coca-Cola Co.’s $2.3 billion bid for China Huiyuan Juice Group Ltd., saying the biggest foreign takeover of a Chinese company may stifle competition in the country’s drinks market.

The Ministry of Commerce said it blocked the deal because it may lead to a “dominant position” for Coca-Cola, limiting competition and making it more difficult for smaller rivals to survive. “This could force consumers to pay higher prices and have less variety of products,” it said in a statement on its Web site today.

The decision to block Coca-Cola’s biggest overseas acquisition will cost the world’s largest soft-drinks maker the opportunity to boost its share of China’s juice market to more than 20 percent. Coca-Cola’s sales by volume rose 19 percent last year in China and declined by 1 percent in North America.

“It’s a surprise decision for me,” said Qiu Dongrong, consumer analyst at CSC Securities HK Ltd. “We didn’t expect this will affect competition.”

Huiyuan Shares Slide

Huiyuan fell 19 percent to HK$8.30 in Hong Kong, the most since it started trading in February 2007. That’s 32 percent below the HK$12.20 per share offer by Coca-Cola. The shares were suspended 13 minutes after the 10 a.m. start of trading.

Kenth Kaerhoeg, a Hong Kong-based spokesman for Coca-Cola, and Natalie Tam of IPR Ogilvy, Huiyuan’s public relations firm, didn’t immediately return calls seeking comment. Dana Bolden, Coca-Cola spokesman, declined to comment when interviewed before the ministry’s announcement.

“Beijing wants to protect its own brands,” Renee Tai, Hong Kong-based food and beverage analyst at CIMB-GK Securities (HK) Ltd., said before the decision was published. “Drinks are not politically sensitive products, but it’s purely political.”

An acquisition of Huiyuan would have helped Coca-Cola Chief Executive Officer Muhtar Kent maintain the company’s lead over Pepsico Inc. as U.S. soda sales slow.

China’s fruit- and vegetable-juice sales may rise 20 percent to 97.1 billion yuan ($14 billion) this year, almost double the rate for carbonated drinks, according to Euromonitor International.

Market Share

Coca-Cola controlled 52.5 percent of the Chinese soda market by volume in 2008, compared with Pepsi’s 33 percent, according to Euromonitor International. Coca-Cola had 12 percent of the fruit-and vegetable-juice market while Pepsi’s share was 1.4 percent. Huiyuan had an 8.5 percent share of that market while controlling 33 percent of the pure-juice market.

Coca-Cola proposed to purchase Huiyuan for at least $2.3 billion in September, in what would have been the Atlanta-based company’s biggest overseas acquisition. The cost of the deal could have risen to HK$19.6 billion ($2.5 billion) depending on whether Huiyuan bonds are converted into shares, according to the Hong Kong-listed juicemaker.

The deal would have been the U.S. beverage maker’s biggest overseas acquisition.

Coca-Cola said on March 6 it plans to invest $2 billion in China over the next three years to win more of the nation’s 1.3 billion consumers. The beverage maker said it had already spent $1.6 billion investing in China since returning in 1979.

Apart from Coca-Cola, Sprite and Minute Maid, the Atlanta- based beverage maker also sells Yuan Ye, a green tea drink, in China. The carbonated drinks market may grow 11 percent to 74 billion yuan this year, according to Euromonitor.

China’s commerce ministry had given conditional approval for InBev NV in November to complete its $52 billion takeover of Anheuser-Busch Cos., barring the acquirer from raising stakes in existing units or buying shares of new brewers.

The Australian dollar reached the new monthly maximum the Japanese yen as the stock markets signaled growth for a third day on improved earnings of the banks.

The currency experienced a minor decline during the day as the markets reacted on the RBA minutes stating the necessity of the further interest rate cuts. But then the growth followed. The Aussie also fell against the New Zealand dollar as the gain in commodities market made the NZD look more promising than than its Australian counterpart.

The analysts talk mainly about the good news from the U.S. banking sector as the primary reason for the global stock and high-yielding optimism. Some are afraid of the further rate cuts and say that the current optimism can’t last for too long and the Australian dollar has now some considerable space to fall. When the optimism is over, the crude oil will start to pare its gains and the Aussie will have to step back against other currencies.

AUD/USD is currently trading near its open level at 0.6583 as of 13:52 GMT after almost reaching new monthly high at 0.6615. AUD/JPY rose from 64.74 to 65.03 after peaking at 65.39 — the highest level since January 8. AUD/NZD fell for sixth day in a row — from 1.2442 to .12424. NZD/USD rose from 0.5288 to 0.5300, while NZD/JPY went up from 51.96 to 52.59 today.

The Great Britain pound declined against the other major currencies today on speculations that the employment report that is scheduled for the release today will show that the situation with labor market is worsening.

Despite the continued gains on the global stock markets and the elevated interest for the high-yielding assets, the pound sterling fell for the first day in five against the Japanese yen and continued its yesterday’s moderate decline against the U.S. dollar and the euro. The market participants expect an increased number of the jobless claims in U.K. from the report that’s released today at 9:30 GMT.

Bank of England Governor Mervyn King said during its late yesterday speech in London that the positive outlook for the consumer price growth may turn the monetary policy back to the bullish trend in the interest rate. Analysts saw this statement as a positive signal for the pound but it looks like the markets aren’t sure about the positive CPI numbers appearing on the horizon soon.

GBP/USD fell from 1.4055 to 1.3966 as of 7:49 GMT today. GBP/JPY went down from 138.73 to 137.66, while EUR/GBP rose from 0.9271 to 0.9305 today.

Forex Auto Trading is a fantastic way to trade for people who have too many emotions or can not be in front of their computer all the time. Autotrading will give you the freedom to test as many robots or EA’s as you wish without risking a dime.

We will go over some Auto trading robot’s and find the ones that work.

Trying to figure out which autotrade method will work for you may take some time, so you will need to be very patient and not get discouraged. The creation of demo trading allows us to test as many autotrading methods that are available to us, which is a fantastic thing.

Six Auto trading Methods that come to mind

1. Scalping auto trading
2. Breakout Auto trading
3. Pivot Point trading
4. Fibonacci auto trading
5. News Straddle System
6. Moving average crossover

Which automated Forex trading strategy is the best? We will work as hard as we can to find out. If at any point you have any questions or feedback please let us know so we can find an answer for you. Trading is an art and as traders we want to share our projects with you, whether they are worthless or profitable. You always need to keep in mind that past performance does not mean you will have the same future results.

(CEP News) - Alternative monetary policies will only be deployed if deflation pressures were to mount in euro zone countries, Bundesbank President Axel Weber said on Thursday.In a press conference with reporters in Frankfurt, the central banker said the European Central Bank plans to continue with its extraordinary liquidity-providing operations for now and will consider further action if things get worse.

For now, the ECB continues to have room to cut rates further if needed, he added.

His comments mirror those made by European Central Bank President Jean-Claude Trichet on Thursday who, after cutting rates 50 bps to 1.50% as expected, explicitly said alternative policies are being considered and that none would be forthcoming for now.

Trichet also declined to elaborate on whether the purchase of corporate paper is under consideration.

By Erik Kevin Franco, efranco@economicnews.ca, edited by Stephen Huebl, shuebl@economicnews.ca

CEP Newswires - CEP News ? 2009. All Rights Reserved. www.economicnews.ca

The Copying, Broadcast, Republication or Redistribution of CEP News Content is Expressly Prohibited Without the Prior Written Consent of CEP News.

A copy of CEP News disclaimer can be found at http://www.economicnews.ca/cepnews/wire/disclaimer.

The U.S. dollar rose against the the Japanese yen and the Australian dollar today as the investors sought the safety for their funds after the yesterday’s optimism vanished on the bad report for the Australian fourth quarter GDP change.

The dollar went up against the yen for the second day today and also gained for the fourth day against the euro. It looks like the Japanese yen has lost its status of the «safe haven» currency after the country’s GDP fell by 12.5 percent in the fourth quarter of 2008. Now only the dollar attracts the currency traders and investors during the harsh times in the markets.

After the Australian GDP change for the Q4 2008 was reported at -0.5 percent instead of the expected 0.2 percent, the U.S. dollar currency index rose its highest level since April 2006, while the Australian dollar fell to the one-month low against its American counterpart. The drop in the Australia’s GDP scared the investors, signaling that it’s yet too early for buying the risky assets and currencies.

EUR/USD fell from 1.2541 to 1.2519 as of 8:51 GMT today after falling as low as 1.2467 earlier. USD/JPY rose from 98.20 to 99.20, peaking at 99.36. AUD/USD has already recovered from losses but was down to 0.6295 today.