China’s yuan was poised for a third weekly gain as oil prices surged and a report signaled exporters are withstanding the currency’s appreciation.
Crude prices in New York surged to $107.65 a barrel, adding to pressure on authorities to seek a stronger yuan to reduce import costs. Manufacturing growth accelerated for the first time in four months, easing concern that monetary tightening may lead to a sharp slowdown in the world’s second-biggest economy. China’s central bank set the reference rate 0.06 percent higher at 6.5527, the strongest level since July 2005.
“The move reflects continued need to fight imported inflation via currency appreciation as oil prices continue to climb,” said Dariusz Kowalczyk, a Hong Kong-based senior economist at Credit Agricole CIB. “China remains in a tightening mode and will use a variety of tools, including stronger currency, to bring price pressures under control.” Kowalczyk forecast the yuan to reach 6.3 per dollar by the end of this year.
The yuan gained 0.16 percent this week and rose 0.02 percent today to 6.5472 per dollar as of 10:00 a.m. in Shanghai, according to the China Foreign Exchange Trade System. The currency touched 6.546 today, the strongest level since the country unified official and market exchange rates at the end of 1993. In Hong Kong’s offshore market, the currency fell 0.02 percent to 6.5485.
Twelve-month non-deliverable forwards were little changed at 6.419 per dollar in Hong Kong, reflecting bets the currency will strengthen 2 percent from the onshore spot rate in a year, according to data compiled by Bloomberg. Group of 20 finance chiefs meeting in China yesterday held out the prospect of an enlarged global role for the yuan to encourage the government to free up a currency described by the U.S. as “substantially undervalued.”
Manufacturing Strength
The Purchasing Managers’ Index rose to 53.4 in March from 52.2 in February, the China Federation of Logistics and Purchasing said in a statement on its website today. The reading compared with the median forecast of 54 in a Bloomberg News survey of 17 economists.
Premier Wen Jiabao is seeking to restrain surging prices for homes and consumer goods while sustaining economic growth to create jobs. Inflation topped the government’s target in the first two months of this year and officials will boost interest rates again this quarter, according to all 20 economists in a Bloomberg News survey.
Source
Thursday, March 31, 2011
Tuesday, March 29, 2011
Crude Oil Trades Near One-Week Low in New York as Libyan Rebels Make Gains
Crude oil dropped to the lowest price in a week in New York as the advance of Libyan rebels against Muammar Qaddafi’s troops spurred hope that the conflict in Africa’s third-largest oil producer may end soon.
Futures fell as much as 1.2 percent after Libyan government troops prepared to block advancing rebels at Sirte, Qaddafi’s hometown. Crude extended losses after St. Louis Federal Reserve President James Bullard indicated that the Fed may tighten monetary policy soon, fanning speculation demand growth may falter in the U.S., the world’s biggest oil consumer.
“The fairly disappointing news hurt market sentiment for risk appetite and pushed crude oil prices lower,” said Myrto Sokou, a London-based research analyst at Sucden Financial Ltd.
Crude for May delivery on the New York Mercantile Exchange fell as much as $1.28 to $102.70 a barrel, the lowest price since March 22, and was at $103.28 at 1:34 p.m. London time. Brent crude for May settlement on the London-based ICE Futures Europe exchange was down 59 cents at $114.21 a barrel.
President Barack Obama yesterday defended his decision to involve U.S. forces in the war. Military intervention “stopped Qaddafi’s deadly advance” and helped prevent a massacre of civilians that would have “stained the conscience of the world,” Obama said in a speech at the National Defense University in Washington late yesterday.
U.S. Monetary Policy
The U.S. Federal Reserve may need to decide on when to tighten monetary policy before the outlook for the global economy clears up later this year, Bullard said today in Prague.
A reduction in the Fed’s asset-purchase, or “quantitative easing,” program may begin if the U.S. economy is strong and global uncertainties are resolved, he said. A cut in the $600 billion program could be “on the order of $100 billion,” Bullard told reporters today following a presentation at a banking conference in Prague.
The volume of futures contracts trading on the New York Mercantile Exchange declined to 433,173 on March 25, the lowest since Dec. 31, according to data compiled by Bloomberg. Oil rose 4.3 percent last week to $105.40 a barrel.
“As governments around the world continued to take actions in response to the recent events, the oil market took a wait- and-see approach,” David Greely and Jeffrey Currie, analysts at Goldman Sachs, said in a report dated yesterday.
Hedge Fund Positions
Lower trading volumes are accompanied by high speculative net-long positions. Hedge-fund managers and other large speculators, betting that prices will rise, increased their net- long positions in futures by 5.9 percent to 286,812 futures in the seven days ended March 22, according to Commodity Futures Trading Commission data.
“We are in a situation where the speculative long positions are at very high levels but market liquidity at very low levels. This makes for a clear liquidity risk,” Olivier Jakob, managing director of Geneva-based consultants Petro matrix, said in a research note.
Futures in New York have rallied 22 percent since anti- government protests began Feb. 15 in Libya. The market may see little room for further gains in the near future, according to Glen Ward, head of retail derivatives of London Capital Group.
“All these long positions have to be got out of at some stage, so it’s time for the market to have a correction,” Ward said. “What you have seen is basically profit-taking.”
Stockpiles of crude in the U.S., the world’s biggest oil consumer, probably gained for a fourth week as imports rose ahead of the peak gasoline demand season, a Bloomberg News survey showed. The Energy Department publishes its weekly inventory report tomorrow. The industry-funded American Petroleum Institute releases its supply data today.
Commercially held inventories climbed 2 million barrels in the week ended March 25, according to the median estimate of nine analysts surveyed. Supplies previously increased to 352.8 million, the highest since December, as imports reached a six- week high.
Source
Futures fell as much as 1.2 percent after Libyan government troops prepared to block advancing rebels at Sirte, Qaddafi’s hometown. Crude extended losses after St. Louis Federal Reserve President James Bullard indicated that the Fed may tighten monetary policy soon, fanning speculation demand growth may falter in the U.S., the world’s biggest oil consumer.
“The fairly disappointing news hurt market sentiment for risk appetite and pushed crude oil prices lower,” said Myrto Sokou, a London-based research analyst at Sucden Financial Ltd.
Crude for May delivery on the New York Mercantile Exchange fell as much as $1.28 to $102.70 a barrel, the lowest price since March 22, and was at $103.28 at 1:34 p.m. London time. Brent crude for May settlement on the London-based ICE Futures Europe exchange was down 59 cents at $114.21 a barrel.
President Barack Obama yesterday defended his decision to involve U.S. forces in the war. Military intervention “stopped Qaddafi’s deadly advance” and helped prevent a massacre of civilians that would have “stained the conscience of the world,” Obama said in a speech at the National Defense University in Washington late yesterday.
U.S. Monetary Policy
The U.S. Federal Reserve may need to decide on when to tighten monetary policy before the outlook for the global economy clears up later this year, Bullard said today in Prague.
A reduction in the Fed’s asset-purchase, or “quantitative easing,” program may begin if the U.S. economy is strong and global uncertainties are resolved, he said. A cut in the $600 billion program could be “on the order of $100 billion,” Bullard told reporters today following a presentation at a banking conference in Prague.
The volume of futures contracts trading on the New York Mercantile Exchange declined to 433,173 on March 25, the lowest since Dec. 31, according to data compiled by Bloomberg. Oil rose 4.3 percent last week to $105.40 a barrel.
“As governments around the world continued to take actions in response to the recent events, the oil market took a wait- and-see approach,” David Greely and Jeffrey Currie, analysts at Goldman Sachs, said in a report dated yesterday.
Hedge Fund Positions
Lower trading volumes are accompanied by high speculative net-long positions. Hedge-fund managers and other large speculators, betting that prices will rise, increased their net- long positions in futures by 5.9 percent to 286,812 futures in the seven days ended March 22, according to Commodity Futures Trading Commission data.
“We are in a situation where the speculative long positions are at very high levels but market liquidity at very low levels. This makes for a clear liquidity risk,” Olivier Jakob, managing director of Geneva-based consultants Petro matrix, said in a research note.
Futures in New York have rallied 22 percent since anti- government protests began Feb. 15 in Libya. The market may see little room for further gains in the near future, according to Glen Ward, head of retail derivatives of London Capital Group.
“All these long positions have to be got out of at some stage, so it’s time for the market to have a correction,” Ward said. “What you have seen is basically profit-taking.”
Stockpiles of crude in the U.S., the world’s biggest oil consumer, probably gained for a fourth week as imports rose ahead of the peak gasoline demand season, a Bloomberg News survey showed. The Energy Department publishes its weekly inventory report tomorrow. The industry-funded American Petroleum Institute releases its supply data today.
Commercially held inventories climbed 2 million barrels in the week ended March 25, according to the median estimate of nine analysts surveyed. Supplies previously increased to 352.8 million, the highest since December, as imports reached a six- week high.
Source
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