Friday, January 4, 2013

20130104 1730 Global Markets & Commodities Related News.

STOCKS: European stocks are seen opening fractionally lower and Asian shares fell as investors booked profits from a recent sharp climb after senior Federal Reserve officials expressed concerns about continuing to expand stimulative bond buying. U.S stocks dipped on Thursday. (Reuters)

FOREX: The dollar rose to its highest level against the yen in nearly 2 1/2 years, while the euro also firmed against the yen on expectations that this year will bring more monetary stimulus by the Bank of Japan.  (Reuters)

FOREX-Euro falls to three-week low versus bouyant dollar
LONDON, Jan 4 (Reuters) - The euro fell to a three-week low against the dollar with the U.S. currency bolstered by latest Federal Reserve minutes that raised some concerns that it may slow future asset purchases.
The euro  fell to $1.3006, its lowest level since Dec. 12 with near term support at its 55-day moving average of $1.2986 and bids reported below that.

Fed becoming worried about stimulus side effects (Reuters)
Federal Reserve officials are increasingly concerned about the potential risks of the U.S. central bank's asset purchases on financial markets, even if they look set to continue an open-ended stimulus program for now.

U.S. hiring seen edging up, recovery grinds on (Reuters)
U.S. employers likely stepped up hiring a touch in December as retailers and other businesses took on more staff for the holidays, but the gain will probably not be enough to make inroads in the country's still high unemployment rate.

Egypt says wheat stocks ample, cuts import target (Reuters)
Egypt's state wheat buyer said on Thursday it had bought enough supplies from local and international sources to last until June 17, while higher local wheat supplies mean that it can cut its annual wheat import target by around a million tonnes.

US crude stockpiles plunged by 12 mln barrels last week-API (Reuters)
U.S. crude oil inventories fell sharply last week and imports tumbled, data from the American Petroleum Institute showed on Thursday, as Gulf Coast refiners drew down stocks for end of the year tax purposes.

OIL: Brent crude fell below $112 a barrel as growing doubts within the U.S. Federal Reserve about the side effects of its stimulus programme and the prospect of more budget battles in Washington curbed investor appetite for riskier assets. (Reuters)

Peru workers of Southern Copper eye strike, pending talks (Reuters)
Workers at the main units of Southern Copper in Peru will hold contract talks soon with the global copper producer but say they could strike after Jan. 15 if negotiations break down, union leader Ricardo Juarez said on Thursday.

BASE METAS: London copper lost 1 percent, extending losses from the previous session as the euphoria surrounding the U.S. fiscal deal fizzled and investors turned their focus to the uncertain global economic recovery. (Reuters)

PRECIOUS METALS: Gold dropped more than 1 percent to its lowest in two weeks on signs the U.S. Federal Reserve is worried about its highly stimulative monetary policy which, if stopped, would threaten bullion's appeal as a hedge against inflation. (Reuters)

COLUMN-Iron ore, copper outrunning modest China PMI rally
--Clyde Russell is a Reuters market analyst. The views expressed are his own.--
LAUNCESTON, Australia, Jan 4 (Reuters) - Copper and iron ore, the industrial metals most likely to benefit from China's renewed growth, have enjoyed strong starts to the new year but they run the risk of rallying too hard, too quickly.
No doubt investors have been cheered by the avoidance, for now anyway, of the fiscal cliff in the United States and growing signs that China's economy is re-accelerating after achieving a soft landing last year.

METALS-London copper weakens, U.S. fiscal deal euphoria fades
SINGAPORE, Jan 4 (Reuters) - London copper lost nearly 1 percent extending losses from the previous session as the euphoria surrounding the U.S. fiscal deal fizzled and investors turned their focus to the uncertain global economic recovery.
"The stimulus from the U.S. 'fiscal cliff' resolution is over and now copper investors are re-focusing on China's economy," said Zhang Ao, an analyst at Minmetals Futures.

PRECIOUS-Gold slips 1 pct on Fed minutes, firm dollar
SINGAPORE, Jan 4 (Reuters) - Gold dropped more than 1 percent to its lowest in two weeks on signs the U.S. Federal Reserve is worried about its highly stimulative monetary policy which, if stopped, would threaten bullion's appeal as a hedge against inflation.
"This is the first impact. So I am not sure how deep this news will affect the market yet. I guess the market will be held at around the $1,645 to $1,650 level," said Yuichi Ikemizu, branch manager for Standard Bank in Tokyo, adding that lower prices could attract buying from the physical sector.

Dry bulk shipping market could bottom in Q1 -Golden Ocean
OSLO, Jan 2 (Reuters) - The dry bulk shipping crisis, which has already bankrupted several major players, could bottom out in the first quarter, earlier than some players expect, Herman Billung, the head of dry bulk shipper Golden Ocean said on Wednesday.
The market could hit its bottom following the Lunar New  Year in February, then improve slowly but gradually before marked improvement toward the end of the year, said Billung, who runs shipping tycoon John Fredriksen's dry bulk arm.

20130104 1117 Global Markets & Energy Related News.

GLOBAL MARKETS-Asian shares drop on Fed minutes, dollar extends gain
TOKYO, Jan 4 (Reuters) - Asian shares fell, tracking overnight weakness in global equities, but the dollar gained as U.S. debt yields rose after several Federal Reserve officials expressed concerns about  continuing to expand stimulative bond buying.
"The minutes have added a fresh degree of uncertainty into the investment climate, which is likely to mean a steeper yield curve. But equity investors should take heart from the fact that the Fed's perception is qualified on an improving economy,"    Andrew Wilkinson, chief economic strategist at Miller Tabak & Co in New York, said in a note to clients.

FOREX-Yen drops vs dollar; U.S. jobs data awaited
TOKYO, Jan 4 (Reuters) - The dollar rose to its highest level against the yen in nearly 2 1/2 years, while the euro also firmed against the yen on expectations that this year will bring more monetary stimulus by the Bank of Japan.
"The yen's negatives are increasingly prominent - economic deterioration, external weakness, geo-political conflict with major trading partners, physical and human capital outflow, and increasing pressure on the BOJ," Steven Englander, head of global G10 currency strategy for Citigroup, said in a research note.

 Fed sticking to asset buys despite growing internal doubts
WASHINGTON, Jan 3 (Reuters) - The Federal Reserve looks set to continue buying bonds to stimulate economic growth over coming months despite rising concern about the risks of the policy inside the central bank.
Minutes from the Fed's December meeting showed a growing reticence about further increases in the central bank's $2.9 trillion balance sheet, which it expanded sharply in response to the financial crisis and recession of 2007-2009.

US crude stockpiles plunged by 12 mln barrels last week-API
NEW YORK, Jan 3 (Reuters) - U.S. crude oil inventories fell sharply last week and imports tumbled, data from the American Petroleum Institute showed on Thursday, as Gulf Coast refiners drew down stocks for end of the year tax purposes.
Crude stockpiles across the world's top oil consumer dropped by 12 rels in the week to Dec. 28, well over expectations for a 900,000 barrel draw, according to the data. The declines came as crude oil imports fell by 845,000 barrels per day, to 7.43 million bpd for the week. The East Coast showed a smaller 2 million barrel decline in crude stockpiles.

OIL-Brent crude slips as profit taking, Fed minutes weigh.
NEW YORK, Jan 3 (Reuters) - Oil slipped after prices hit 11-week highs, on worries about looming U.S. budget battles and signs of growing concern by the U.S. Federal Reserve about buying bonds to spur economic growth.
"The uncertainty because of the budget cuts and the ceiling debate s eems to have tempered the m arkets' e nthusiasm that things were getting better and that's why things have stalled," said Gene McGillian, an analyst at Tradition Energy in Stamford, Connecticut.

20130104 1110 Global Economy Related News.

US  jobless claims  rose 10,000 to 372,000 in the 29 Dec week (a revised 362,000 in the earlier week), higher than consensus of 363,000. (Bloomberg)

The  US ADP employment report revealed very significant strength in private payrolls with the Dec estimate at 215,000 (a revised 148,000 in Nov), above the consensus of 150,000. (Bloomberg)

The US Challenger job-cut report revealed that layoff announcements were very limited in Dec at 32,556 from Nov’s 57,081. This marks the lowest level since Aug and is the third lowest of the whole recovery. (Bloomberg)

The US MBA mortgage applications index fell 14.8% wow in the 28 Dec week (-5.0% in the earlier week), whilst the refinance index lost 23.3% wow (-14.0% in the prior week). (Bloomberg)

US domestic vehicle sales registered at 11.6m in Dec, short of Nov’s 12.0m and underperforming the consensus of 11.7m. (Bloomberg)

Eurozone M3 money supply moderated to 3.8% yoy in Nov from 3.9% in Oct, matching economists’ expectations. (RTTNews)

China’s non-manufacturing PMI improved to 56.1 in Dec from 55.6 in Nov.(Bloomberg)

Singapore’s manufacturing PMI eased slightly to 48.6 in Dec (48.8 in Nov), disappointing forecasts of 49.5. The  electronics sector index weakened further to 46.6 in Dec from 47.4 in Nov, against expectations of a 47.7 reading. (Bloomberg)

India’s current account deficit swelled to US$22.31bn in the quarter ended 30 Sep, the widest in Reserve Bank of India data beginning 1949. (Bloomberg)

Thailand’s Energy Regulatory Commission (ERC) has approved an increase in the fuel adjustment tariff (Ft) rate of 4.04 satang/unit from Jan to Apr, which will mean a corresponding increase in electricity charges. (Bangkok Post)

20130104 1110 Malaysia Corporate Related News.

The approved  West Coast Expressway (WCE)  project is a scaled down version costing an estimated RM5.2bn, lower than the original plan that involved a longer stretch and to cost RM7.1bn. Previously the WCE covered a distance of 316km of which 224km would be tolled while 92km would be toll-free. The agreement now is to develop a highway stretching 233km of which 40km are to be constructed later. Sources say the toll-free section spanning over 80km has been taken out of the job scope. The 60-year concession and RM2.2bn government support loan remain intact. However, an interest subsidy of 3% for commercial loans for 22 years has been removed.Toll revenue sharing in excess of an agreed traffic volume between the government and the concessionaire (70:30 till full settlement of loan, 30:70 after full settlement of loan)  remain unchanged. The RM980m land acquisition cost will be borne by the government. (Financial Daily)

The stock market surged to a fresh high on the second trading day of the new year, with  a couple of index-linked counters testing or creating new historical highs. Funds were taking positions and re-balancing their portfolios as they normally did at the beginning of every year, pushing the FTSE Bursa Malaysia KLCI up 18 points or 1.07% to 1,692.65 points. (Starbiz)

From Jan 1, Malaysians, especially young adults, can now buy a house as soon as they get jobs. Under the tweaked  My First Home Scheme rules, they can immediately apply for loans to buy their first home. Earlier, they had to work for a minimum of six months before they qualified for loans. Cagamas SRP Bhd also cancelled the stipulation that workers needed a minimum savings record of three months in banks. The scheme allows homebuyers to get 100% financing from participating banks, meaning they can own a home without having to pay the 10% downpayment. Cagamas will guarantee the initial 10% of the loan. Among the qualifying criteria are residential properties must be between RM100k-400k and buyers are required to live in the property. Financing tenure must not exceed 40 years, subject to the borrower's age not exceeding 65 at the end of financing tenure. (NST)

Syarikat Prasarana Negara (Prasarana)  plans to issue up to RM6bn in Islamic bonds this year to finance the  LRT extension projects and infrastructure. It recently said there were plans to list the rail business after 2018, following the completion of the  MRT  from Sungai Buloh-Kajang. Prasarana also plans to undertake RM2bn in property development projects in the Klang Valley, of which RM1.2bn would be in Brickfields and the remaining in Ara Damansara, Subang. (Starbiz)

Boustead Holdings is confident of generating 25% return on development cost from its RM160m acquisition of 81ha of land in Bukit Raja, Selangor, from Astacanggih Sdn Bhd. Boustead directors said the acquisition is an opportunity for the group to increase its landbank to benefit from economies of scale by combining the 81ha land with the adjacent 283.4ha land held under Jendela Hikmat Sdn Bhd. (BT)

LBS Bina Group is setting its sights on a higher sales target of RM1bn for 2013, on the back of a growing economy and a diverse range of products. In its pipeline for 2013 are ongoing launches and new launches with a GDV of RM3bn, whereby 31% are properties below RM400,000, 42% between RM400,000 and RM1m, and 27% above RM1m. "Its about the right product with the right pricing," managing director Datuk Lim Hock San said. (StarBiz)

TH Heavy Engineering (THHE), an associate company of Tabung Haji (TH), is close to acquiring some 80ha of land in Pulau Indah, Port Klang, for RM150m. Business Times was told that an announcement on the matter is expected to be made by as early as next week.  "At this point, there are two options on the table. One is for THHE to buy the land directly, while the second option is for Tabung Haji to acquire the land and lease it to THHE," said a person with direct knowledge on the matter. It is understood that THHE plans to set up an offshore oil and gas fabrication yard in Port Klang to help service the needs of national oil and gas company, Petroliam Nasional Bhd. (BT)

Malaysia Airlines (MAS) is aiming to maintain its positive fiscal reporting trend this year, fuelled by consistent and aggressive implementation of its Business Plan announced in December 2011, with added focus on increasing revenue and yields through aggressive marketing and promotions, and better capacity management. At the same time, the airline will actively continue to lower costs through improved cost management and driving productivity for better efficiences system-wide. (Bernama)

AirAsia will withdraw its daily flights from Penang to Hong Kong effective March 4. The airline said the move was to realign its route planning for Penang hub and due to commercial reasons. It said guests who are affected by the withdrawal would be offered options to alleviate any inconvenience that might occur. (Bernama)

Ho Hup Construction Co and its 70%-owned unit Bukit Jalil Development Sdn Bhd have repaid in full the RM75m financing facility secured against the 60-acre land in Bukit Jalil, Kuala Lumpur. The payment was made on its behalf by Pioneer Haven Sdn Bhd, a subsidiary of  Malton, following a settlement agreement between Pioneer Haven and Bukit Jalil Development on the joint development of the land. (Sun)

GW Plastics Holdings, whose shareholders approved a plan to sell its core businesses to its bigger rival  Scientex, wants to retain its listing status following the RM283.2m disposal, said its CEO Lim Kok Boon. "We are selling all the operating companies away. Subsequent to that, the holding company will not have any activity. (But) it's our intention to retain the listing status and that would involve, of course, looking into other potential operations that could be injected into the listed company," Lim said. However, Lim added his primary focus right now is to complete the disposal process before looking for viable business opportunities for the company. (Sun)

Sime Darby Property Bhd's The Residences at Putra Heights, has won the Best Villa Development in Malaysia award at the 2012 South East Asia Property Awards held in Singapore recently. (Starbiz)

20130104 0933 Global Markets Related News.

Asia FX By Cornelius Luca - Thu 03 Jan 2013 16:50:19 CT (
The appetite for risk declined further on Thursday in the wake of the temporary solution of the "fiscal cliff" crisis and after the latest Fed Minutes showed disagreement over the duration of bond buying. FX traders quickly curbed their enthusiasm because the next two months will see more negotiations over the debt ceiling. The European and commodity currencies fell, while the yen consolidated near new lows for the downtrend. The US stock markets slipped. Gold, oil and silver declined as well. The short-term outlook for the foreign currencies is sideways. The medium-term outlook for most of the foreign currencies is sideways. The LGR short-term model is short on European currencies and long on commodity currencies. Good luck!

US: The jobless claims increased 10,000 to 372,000 in the week ended December 29th from the previous week's revised figure of 362,000 (from the 350,000 originally reported).
US: ADP said private sector employment increased by 215,000 jobs in December following an upwardly revised increase of 148,000 jobs in November (from 118,000 jobs originally reported).

Today's economic calendar
Australia: AiG performance of services index for December
China: HSBC China services PMI for December

Asian Stocks Outside Japan Decline on Fed Minutes; Nikkei Jumps (Bloomberg)
Asian stocks outside Japan fell after Federal Reserve policy makers said they will probably end their $85 billion monthly bond-purchase program sometime this year. Japanese equities rose as markets reopened today.
BHP Billiton Ltd., the world’s largest mining company, dropped 1.2 percent, as metals prices fell. Toyota Motor Corp. surged 4.1 percent as the yen weakened to the lowest level against the dollar since July 2010, boosting the earnings outlook for exporters. Japan Exchange Group began trading after the merger between Osaka Securities Exchange Co. and Tokyo Stock Exchange Group.
The MSCI Asia Pacific Excluding Japan Index (MXAPJ) declined 0.4 percent to 476.50 as of 9:21 a.m. in Tokyo. Japan’s Nikkei 225 Stock Average (NKY) gained 2.9 percent on its first trading day of 2013 after U.S. lawmakers passed a bill averting spending cuts and tax increases scheduled to come into effect this year. It is headed for its highest closing level since March 2011. Markets also reopen later today in China.
“The work that we’ve done shows often what has caused previous recessions was pulling stimulus off too early before growth started to build on itself,” James Lindsay, Auckland- based equity fund manager at Tyndall Investment Management Ltd., which oversees about $23 billion, said in a phone interview. “This has been more of a relief rally than anything else. The hard yards are still to come. U.S. economic data remains pretty mixed.”

Japan Stocks Jump as Market Reopens, Yen Lifts Exporters (Bloomberg)
Japanese stocks advanced, chasing gains among Asian markets following a four-day holiday, as the yen weakened to the lowest level since 2010, boost the earnings outlook for exporters including Toyota Motor Corp. (7203)
Toyota jumped 4.4 percent. Japan Exchange Group, created by the merger of the country’s two biggest bourses, plunged in its Tokyo trading debut. Sharp Corp. dropped 3 percent after the Yomiuri newspaper reported the loss-making television maker may raise 100 billion yen ($1.1 billion).
The Nikkei 225 Stock Average (NKY) jumped 2.9 percent to 10,696.23 as of 9:49 a.m. in Tokyo, heading for its highest close since March 2011. The broader Topix Index climbed 2.9 percent to 885.04. The Japanese market is trading for the first time this year and is catching up with other Asian markets, which rallied this week after the U.S. Congress passed legislation averting more than $600 billion in automatic tax increases and spending cuts.
“We’ve averted a worst-case scenario on the fiscal cliff and the market is breathing a sigh of relief,” said Juichi Wako, senior strategist at Nomura Securities Co. in Tokyo. “Companies have already settled their exchange rates for this quarter, so we shouldn’t too much upward movement in earnings from the yen’s weakness right away. But investors expect next quarter to look pretty good.”
The Japanese yen fell to a two-and-half year low against the dollar, heading for a 1.9 percent decline this week and extending losses for an eighth week. The yen fell before Bank of Japan Deputy Governor Kiyohiko Nishimura speaks today amid bets the BOJ will boost money supply to end deflation.

U.S. Stocks Fall as Fed Sees Bond Buying Ending in 2013 (Bloomberg)
U.S. stocks fell, following the biggest rally in a year for the Standard & Poor’s 500 Index, as Federal Reserve policy makers said they will probably end their $85 billion monthly bond-purchase program sometime in 2013.
Family Dollar Stores Inc. (FDO) tumbled 13 percent after forecasting second-quarter earnings that missed estimates. UnitedHealth Group Inc. (UNH) sank 4.7 percent after the biggest U.S. health insurer was cut to hold from buy at Deutsche Bank AG. Ross Stores Inc. and TJX Cos. jumped at least 3.3 percent as consumer-discretionary companies rallied amid same-store sales that topped estimates.
The Standard & Poor’s 500 Index fell 0.2 percent to 1,459.37 in New York. The benchmark index yesterday reached its highest level since September after lawmakers passed a budget bill, avoiding the so-called fiscal cliff. The Dow Jones Industrial Average lost 21.19 points, or 0.2 percent, to 13,391.36 today. About 6.7 billion shares traded hands on U.S. exchanges today, or 10 percent above the three-month average.
“Concern that they’re taking the punch bowl away could certainly cause some jitters in the market,” James Gaul, a portfolio manager at Boston Advisors LLC which oversees about $2.3 billion in assets, said in a telephone interview. “The sell-off sits with what we’ve been thinking, which is that this has been a Fed-supported rally. The liquidity the Fed has been providing to generate financial asset inflation has been driving the market.”
Four years after cutting the main interest rate to near zero, policy makers are expanding their third round of so-called quantitative easing to boost economic growth and cut the jobless rate, now at 7.7 percent. Minutes from the latest Federal Open Market Committee meeting show policy makers are likely to end their $85 billion monthly bond purchases sometime in 2013.

Euro-Area Stocks Retreat Amid Concern on U.S. Deficit (Bloomberg)
Euro-area stocks declined from a 17- month high amid concern a budget deal will fail to reduce the U.S. government’s fiscal deficit. Swiss shares rallied after the New Year holiday.
K+S AG (SDF) retreated 3.5 percent after Exane BNP Paribas lowered its price forecast for the potash maker’s shares. UBS AG (UBSN) and Cie. Financiere Richemont SA each rallied more than 4 percent, leading Swiss stocks higher. Alcatel-Lucent SA (ALU) climbed 9.8 percent as Credit Suisse Group AG raised its recommendation on the maker of telecommunication equipment.
The Euro Stoxx 50 Index of the euro area’s biggest companies fell 0.4 percent to 2,701.22 at the close of trading. The broader Stoxx Europe 600 Index added 0.5 percent to its highest since February 2011 as the Swiss Market Index jumped 2.9 percent after opening for the first time since Dec. 28.
“We’re not over all of the problems with the fiscal cliff,” Jane Coffey, who manages $19 billion as head of U.K. equities at Royal London Asset Management Ltd., said in a Bloomberg Television interview. “We still have to get through March. We have to look at the spending cuts they are going to put in this package.”
The Stoxx 600 (SXXP) rallied 2 percent yesterday after U.S. lawmakers passed a budget bill that avoided most scheduled tax increases. The so-called fiscal cliff of sweeping spending cuts and revenue raising had threatened to push the world’s largest economy into a recession.

Emerging Stocks Post Longest Rally in 14 Months After China Data (Bloomberg)
Emerging-market stocks rose for a ninth day, the longest stretch of gains in more than 14 months, as data showing expansion in Chinese service industries and U.S. consumer sentiment bolstered confidence in the global economy.
China International Marine Containers Group Co. Ltd. (2039), the world’s biggest container maker, surged 15 percent, while Shimao Property Holdings Ltd. (813) jumped the most in 13 months in Hong Kong as financial companies led gains on the MSCI Emerging Markets Index. Banco Bradesco SA (BBDC4) climbed to a record in Sao Paulo as Brazil’s Bovespa (IBOV) Index entered a bull market. Hyundai Motor Co. (005380) fell in Seoul on bets a stronger won may weigh on profits.
The developing-nations gauge added 0.4 percent to 1,082.68 in New York after rising to a 10-month high yesterday and entering a bull market. China’s services industries grew at the fastest pace in four months in December, boosting prospects the nation’s CSI 300 Index will also rally to a bull market when it resumes trading tomorrow. In the U.S., improving consumer sentiment and data showing companies added more workers than projected signaled the world’s largest economy picked up.
“There’s been an incredible turnaround in China sentiment and this data helps that,” John-Paul Smith, an emerging market strategist at Deutsche Bank AG, said by phone from London today. “People’s confidence toward the Chinese economy is almost as high as its ever been.”

Treasuries Are World’s Worst-Performing Bonds Before Jobs (Bloomberg)
Treasuries were the world’s worst performing bonds as economists said a report today will show the U.S. unemployment rate held at the lowest level since 2008.
Government securities maturing in 10 years and longer handed investors a 3.34 percent loss in the past month, the biggest decline of 144 bond indexes tracked by Bloomberg and the Federation of Financial Analysts Societies. Treasuries tumbled this week as lawmakers passed a budget to avert taxes and spending cuts that threatened to throw the economy into a recession, while Federal Reserve policy makers said they will probably end their monthly debt purchases in 2013.
“I’m bearish on Treasuries,” said Hajime Nagata, who helps oversee the equivalent of $117.7 billion as an investor in Tokyo at Diam Co., a unit of Dai-ichi Life Insurance Co. “The economy looks like it’s getting better. Stocks will probably outperform bonds.”
Benchmark 10-year yields were little changed today at 1.91 percent as of 9:08 a.m. in Tokyo, based on Bloomberg Bond Trader prices. The 1.625 percent note maturing in November 2022 changed hands at 97 13/32. The rate climbed 21 basis points, or 0.21 percentage point, this week, the most since March.
Diam trimmed its holdings in December when the 10-year yield fell to 1.6 percent, Nagata said. At the time, he said he’d consider buying 10-year Treasuries if the yield climbed to 1.9 percent. Even though the rate rose to that level yesterday, Nagata said he’s still not ready to purchase the securities given the outlook for the economy and the Fed.

Dollar Advances to 2010 High Versus Yen Before U.S. Jobs (Bloomberg)
The dollar climbed to a 2 1/2-year high against the yen before U.S. data today forecast to show employers added jobs last month, fanning speculation the Federal Reserve will cut cash infusions.
The greenback extended its gain to a third day versus the euro after minutes of the Fed’s last meeting showed policy makers said they’ll probably end their $85 billion monthly bond purchases this year. The yen fell against major peers before Bank of Japan (8301) Deputy Governor Kiyohiko Nishimura speaks today amid bets the BOJ will boost money supply to end deflation.
“Expectations are rising for better U.S. job numbers, which are supportive for the dollar,” said Yasuhiro Kaizaki, vice president of global markets in New York at Sumitomo Mitsui Trust Bank Ltd. “The Fed’s minutes are more hawkish than I thought they’d be.”
The dollar reached 87.78 yen, the highest since July 28, 2010, before trading at 87.65 as of 9:12 a.m. in Tokyo, up 0.5 percent from the close yesterday. It rose 0.1 percent to $1.3039 per euro following a 1.1 percent jump yesterday. The yen fell 0.4 percent to 114.30 per euro.
The U.S. currency climbed as much as 0.2 percent to S$1.2279, the highest against Singapore’s dollar since Nov. 16.
U.S. Labor Department data may show today that nonfarm payrolls rose by 153,000 last month, versus 146,000 in November, according to the median estimate of economists surveyed by Bloomberg News.
A few members of the Federal Open Market Committee “expressed the view that ongoing asset purchases would likely be warranted until about the end of 2013,” minutes of their Dec. 11-12 meeting showed yesterday.
At that meeting, the FOMC announced Treasury purchases of $45 billion a month in addition to $40 billion a month of mortgage-debt purchases begun in September.

Aussie Set for Weekly Gain on Chinese Data; Bonds Fall (Bloomberg)
Australia’s dollar was set to gain for the first week in three before a private report that may add to signs of improvement in China’s economy, the South Pacific nation’s biggest trading partner.
Australian bonds fell, pushing benchmark 10-year yields to the highest in more than four months before HSBC Holdings Plc and Markit Economics report a purchasing managers’ index of Chinese non-manufacturing industries today after a government index yesterday showed expansion in services accelerated in December.
The currencies of “Australia and New Zealand benefit to some extent from better data out of China,” said Callum Henderson, global head of currency research in Singapore at Standard Chartered Plc.
The Australian dollar was little changed at $1.0460 as of 10:46 a.m. in Sydney from $1.0466 yesterday, poised for a 0.8 percent gain this week, the biggest since the five days ended Nov. 23. The so-called Aussie gained 0.4 percent to 91.69 yen from yesterday, when it touched 91.76, the highest since September 2008.
New Zealand’s dollar, known as the kiwi, was little changed at 82.73 U.S. cents, up 0.9 percent since Dec. 28. It added 0.4 percent today to 72.53 yen.
The yield on Australia’s 10-year government bond rose 7.5 basis points, or 0.075 percentage point, to 3.43 percent, after earlier touching 3.44 percent, the highest since Aug. 21.
A purchasing managers’ index of Chinese non-manufacturing rose to 56.1 last month from 55.6 in November, the statistics bureau data said yesterday.
Interest-rate swaps data compiled by Bloomberg show traders see a 44 percent chance the Reserve Bank of Australia will lower its benchmark to 2.75 percent in February, lower than the 59 percent probability indicated at the end of 2012.

Most FOMC Participants Saw QE3 Ending in 2013 (Bloomberg)
Federal Reserve policy makers said they will probably end their $85 billion monthly bond purchases sometime in 2013, with members divided between a mid- or end-of- year finish.
“A few members expressed the view that ongoing asset purchases would likely be warranted until about the end of 2013” while a few others specified no time frame, according to the record of the Federal Open Market Committee’s Dec. 11-12 gathering released today in Washington. “Several others thought that it would probably be appropriate to slow or stop purchases well before the end of 2013, citing concerns about financial stability or the size of the balance sheet.”
Four years after cutting the main interest rate to near zero, policy makers are expanding their third round of so-called quantitative easing to boost economic growth and cut the jobless rate, now at 7.7 percent. In prior rounds of bond purchases, the central bank bought $2.3 trillion in securities.
The minutes show a divide among FOMC participants on how long the purchases should last. Participants who provided estimates were “approximately evenly divided” between those who said it would be appropriate to end the purchases around mid-2013 and those who said they should continue beyond that date.
“They’re willing to do more QE on the premise that the net benefits outweigh the costs,” said Joseph LaVorgna, chief U.S. economist at Deutsche Bank AG in New York. “But they’re more willing to entertain the thought that these actions are going to lose a bit of their efficacy.”

Jobless Claims in U.S. Rose More Than Forecast in Holidays (Bloomberg)
More Americans than forecast filed claims for unemployment insurance payments last week, according to government figures that were estimated because some state agencies closed during the holidays.
Applications for jobless benefits increased 10,000 to 372,000 in the week ended Dec. 29, the Labor Department reported today in Washington. Economists forecast 360,000 claims, according to the median estimate in a Bloomberg survey. A report from the ADP Research Institute showed companies added more workers than projected in December.
“The underlying claims trend is still really low,” said Scott Brown, chief economist at Raymond James & Associates in St. Petersburg, Florida. “There’s a lot of volatility this time of year. Job destruction is really not a problem right now, it’s really hiring that’s the issue.”
The four-week average of claims, a less volatile measure, was little changed, indicating employers held on to current staff at the end of 2012 even as Congress made little progress in budget talks. The deal passed by lawmakers this week averted tax increases on about 99 percent of households while failing to reach a bargain on spending and debt.
The data today from the Roseland, New Jersey-based ADP Research Institute indicated the job market finished 2012 with momentum. The 215,000 increase in employment was the group’s largest since February and followed a revised 148,000 gain the prior month that was larger than initially reported.

Job Gains Lure Investors to Employment-Services Stocks (Bloomberg)
Employment-services companies are attracting investors who are betting the U.S. labor market will keep up its steady pace of job creation.
The Standard & Poor’s Supercomposite Human Resources & Employment Services Index -- which includes Robert Half International Inc. (RHI) and Manpower Inc. (MAN) -- has risen 19 percent since Oct. 15, compared with a 1.5 percent increase for the S&P 500 Index. (SPX) The outperformance coincides with nonfarm payroll data for October and November that exceeded economists’ forecasts.
The better-than-projected reports are generating interest in companies that provide services such as recruitment, back- office administration and human-resources management, said Jeff Silber, a senior analyst in New York at BMO Capital Markets. Even though their businesses are tied more to the need for temporary workers, their near-term stock performance is driven by total hiring, he said.
Job growth that’s “not too hot and not too cold is actually great for these stocks,” because demand for temporary positions remains strong enough to drive earnings, Silber said. “We’re in a Goldilocks-type environment.”
Gains of about 100,000 to 150,000 a month will be “pretty good” for companies such as On Assignment Inc. (ASGN) and TrueBlue Inc. (TBI), Silber said. Nonfarm payrolls expanded by 150,000 in December, based on the median estimate of economists surveyed by Bloomberg. That would mark six straight months at more than 100,000, according to data from the Labor Department, which is scheduled to release the figures tomorrow.

Consumer Confidence Improves as Hiring in U.S. Picks Up (Bloomberg)
Consumer sentiment climbed last week and U.S. companies added more workers than projected in December, showing the world’s largest economy picked up even as lawmakers were embroiled in budget disputes.
The Bloomberg Consumer Comfort Index rose to minus 31.8 in the period ended Dec. 30, its highest since April, from minus 32.1 a week earlier, according to a report today. Figures from the ADP Research Institute showed a 215,000 increase in employment, the largest since February, while the Labor Department said more Americans filed claims for jobless benefits last week.
This week’s agreement averting income-tax increases on about 99 percent of households, combined with the pickup in hiring, may give confidence an added lift after spending at stores from Nordstrom Inc. (JWN) to Gap Inc. (GPS) topped analysts’ estimates last month. A strengthening economy lowers the risk that further deliberations on government spending cuts and the debt will derail the expansion.
“The economy is growing quite well,” said David Sloan, a New York-based senior economist at 4Cast Inc., the best ADP forecaster over the past two years, according to data compiled by Bloomberg. “The labor market seems to be expanding at a fairly solid pace. Consumer spending will continue to grow, but slowly.”
General Motors Co., Ford Motor Co. and Chrysler Group LLC posted December vehicle sales gains that exceeded analysts’ estimates in December, industry reports showed today. Auto purchases ran at a 15.3 million annual rate after 15.5 million in November, the best two months since early 2008.

Consumer Comfort in U.S. Climbed to an Eight-Month High (Bloomberg)
Consumer sentiment last week reached an eight-month high, reflecting broad-based gains that indicated even wealthy Americans were less concerned about tax increases and fiscal policy challenges heading into 2013.
The Bloomberg Consumer Comfort Index rose to minus 31.8 in the period ended Dec. 30, its highest since April, from minus 32.1 a week earlier. For the year, the index climbed 12.9 points, the biggest annual improvement since 1998. Americans earning $100,000 or more reported their most optimistic reading in more than two years.
“The rebuilding of wealth and modest income gains permitted consumer sentiment to overcome slow growth and a politically divisive environment in late 2012,” said Joseph Brusuelas, a senior economist at Bloomberg LP in New York. Rising home values and low interest rates in particular are buoying wealthier households, helping to overcome the threat of higher taxes in 2013, he said.
The index finished the year at its best level since mid- April, less than half a point from the 2012 high it reached twice that month. It has held above its traditional trouble zone, the minus 40s, for 15 straight weeks, a positive run last recorded in early 2008.
For the year, the index averaged minus 38.1, the most since 2007. It remains below its long-term average of minus 15.8.
Stocks fell, pulling the Standard & Poor’s 500 Index down from close to a five-year high. The S&P 500 eased 0.2 percent to 1,459.38 at 9:35 a.m. in New York.
Another report today from the ADP Research Institute showed companies added 215,000 workers in December, the most since February, after a 148,000 gain a month earlier that was larger than initially estimated.

Spain Registered Unemployment Falls for 1st Month in Five (Bloomberg)
Spain’s registered unemployment fell for the first time in five months in December as service industries boosted hiring over the holiday season.
The number of people registering for jobless benefits fell by 59,094 from November to 4.8 million, the Labor Ministry in Madrid said today. That’s the best result on record for December.
The figures suggest an interruption in the retrenchment of the euro area’s fourth-largest economy, which the Organization for Economic Cooperation and Development predicts will shrink for a second straight year in 2013. Economists have forecast an index of service industry activity due to be published tomorrow will show a contraction in December.
“This is quite unique for a December,” Martin Van Vliet, an economist at ING Bank in Amsterdam, said in a telephone interview. “The recession could end in the second half but I’m not holding my breath. With the sheer scale of fiscal tightening in the pipeline I’m still a bit cautious.”
The number of service-sector workers registered as jobless fell by 49,438. At the same time, 4,325 more construction workers and 2,794 more manufacturing workers were unemployed.
Companies are seeking to reduce costs as the deepest austerity measures in the nation’s democratic history undermine domestic demand amid a recession that has spread to the 17- nation euro region. IAG (IAG) is in talks with unions to shrink Spanish airline Iberia’s fleet by 4,500 jobs, while nationalized lender Bankia group pledged to axe 6,000 after securing European aid.
The OECD sees unemployment in Spain, already the highest in the European Union, reaching 27 percent this year.

German Unemployment Rose Less Than Forecast in December (Bloomberg)
German unemployment increased less than economists forecast in December even as Europe’s debt crisis curbed company investment and economic growth.
The number of people out of work rose a seasonally adjusted 3,000 to 2.942 million, the Nuremberg-based Federal Labor Agency said today. Economists predicted an increase of 10,000, the median of 19 estimates in a Bloomberg News survey showed. The adjusted jobless rate held steady at 6.9 percent, close to a two-decade low.
Germany’s economy, Europe’s largest, may have contracted markedly in the fourth quarter after the euro area’s succumbed to recession, the Bundesbank said on Dec. 17. Still, business confidence increased for a second month in December after demand from outside the region boosted factory orders and exports.
“The German labor market is showing signs of cooling, which isn’t that surprising given the economic slowdown in the course of 2012, said Thilo Heidrich, an economist at Deutsche Postbank AG (DPB) in Bonn. ‘‘If the economy stabilizes and recovers in 2013, the labor market could end its weak phase already at the end of the year.’’
The euro was little changed after the report and traded at $1.3139 at 11:04 a.m. in Frankfurt. The benchmark DAX index dropped 0.2 percent to 7760.88, while the Stoxx Europe 600 Index rose 0.2 percent to 286.0.

20130104 0933 Global Commodities Related News.

Calpers Commodity Holdings Fell 55% in October to $1.564 Billion (Bloomberg)
Commodity holdings by the California Public Employees’ Retirement System, the largest U.S. pension fund, tumbled by 55 percent in October, according to the most- recent data available.
The fund held $1.564 billion in commodities as of Oct. 31, or 0.6 percent of the total fund assets listed at $242.749 billion, according to a monthly report released Dec. 10. That’s down from $3.45 billion in raw materials as of Sept. 30, or 1.4 percent of total assets of $243.227 billion, according report released Nov. 13.
The figures for the period through Nov. 30 will be released at the fund board meeting this month, a Calpers press spokesman said today in an e-mail, adding that Calpers doesn’t have any further comment on its commodity holdings. The board meeting will be Jan. 14 through Jan. 16, according to Calpers’ website.

Wheat Rises for First Time This Week on U.S. Plains Dry Weather (Bloomberg)
Wheat rose for the first time this week as drought persists in the U.S. southern Great Plains, where winter varieties have gone dormant.
Snow that fell across the Midwest last week did little to help parched soil recover from the worst drought since the Dust Bowl of the 1930s. Parched conditions grip 61 percent of the 48 contiguous U.S. states, according to the U.S. Drought Monitor in Lincoln, Nebraska. Fund managers in the week through Dec. 25 were net-short 11,899 contracts, the most in seven months, Commodity Futures Trading Commission data show.
“We have some dry conditions out here,” Tom Leffler, the owner of Leffler Commodities LLC in Augusta, Kansas, said by telephone. “And we’re oversold. The funds pushed things up too high and now they’ve pushed too low.”
Wheat futures for March delivery gained 0.7 percent to $7.6075 a bushel at 10:15 a.m. on the Chicago Board of Trade. The price increased 19 percent in 2012, the best performer on the Standard & Poor’s GSCI Index of 24 commodities, partly because of concern about dry weather in the U.S., Russia and Australia, last year’s biggest exporters of the grain.
In the U.S., wheat is the fourth-largest crop, valued at $14.4 billion in 2011, behind corn, soybeans and hay, government data show.

Wheat Market Recap Report (CME)
March Wheat finished up 1/4 at 755 1/2, 5 3/4 off the high and 5 3/4 up from the low. May Wheat closed down 1 1/4 at 764 3/4. This was 4 up from the low and 6 3/4 off the high.
KC and Chicago wheat saw modest gains for most of the day but sell pressure into the closing bell forced wheat lower on the day. Technical short covering following yesterday's sharp losses was prevalent early on but a sharply higher US Dollar limited gains throughout the day. Bearish demand headlines hit the wheat market this morning with Egypt suggesting that they have enough wheat supplies to last until June 17th. The head buyer expects their local wheat purchases this year to rise to 4 million tonnes vs. 3.7 last year. Wheat imports for this fiscal year in Egypt are expected to decline to 3.8 million tonnes, down 1 million tonnes from earlier estimates. The head buyer was quoted as saying the decline in imports is due to the expected increase in domestic purchases rather than then their currency devaluation which weakens their purchasing power. Furthermore, wires reported that an optional-origin wheat sale to Syria from earlier this year is being switched from a Black Sea origin to France. This will be the first cargo of wheat from France, destined for Syria, this season. Dry conditions in the western plains continue to support Kansas City futures against Chicago but better snowfall over the last couple of weeks has help conditions in some areas.
March Oats closed up 2 1/4 at 337 3/4. This was 7 up from the low and 2 1/2 off the high.

Corn Market Recap for 1/3/2013
March Corn finished down 1 1/2 at 689 1/4, 5 1/2 off the high and 4 1/4 up from the low. May Corn closed down 2 1/2 at 691. This was 3 1/4 up from the low and 6 off the high.
March corn ended lower into the closing bell on technical sell pressure and a stronger US Dollar. Calendar spreads were firm which supported a positive trade early on but losses in the soybean market spilled over to corn. Equity markets turned negative late today after FOMC minutes suggested that Fed officials are skeptical about how long their loose monetary policy would last which sent the US Dollar sharply higher. Argentina crop conditions remain mostly favorable despite an abundance of moisture early in the crop year. A dry period will extend into the end of this week but rainfall is set to return early next week which may slow field work. Brazil conditions remain in good shape with the exception of northeastern Brazil which needs rainfall soon. The trade is looking ahead to next week's USDA report with many expecting bullish implications if harvested acreage is slashed. Offsetting the bullish tilt is thoughts that planted acreage next year could hit record levels which would force corn prices dramatically lower if favorable yields are realized.
January Rice finished up 0.025 at 14.78, equal to the high and equal to the low.

Recap Energy Market Report (CME)
February crude oil prices experienced a choppy trading session and registered an inside day trading range. The market came under selling pressure early in the trading session from a combination of profit-taking and weakness in outside market sentiment. The tone of the market changed in favor of higher prices following US private sector hiring data that came in better than expected. Headlines suggesting that the Seaway pipeline expansion effort was on track for next week helped to pressure Brent crude oil relative to West Texas Intermediate. The market turned lower in late afternoon trade following the latest FOMC meeting minutes that indicated that further Treasury purchases could conclude by the end of the year. Meanwhile, expectations for this week's EIA inventory data call for a draw in crude stocks in the range of 750,000 barrels last week.

Brent Crude Oil Market Report (CME)
February Brent crude oil prices spent the entire session in negative territory but were contained inside of yesterday's trading range. While some of the weakness in Brent crude oil was attributed to a decline in macroeconomic sentiment, it is also possible that reports of the Seaway expansion effort on track for next week was a force pulling some of the demand away from Brent in favor of West Texas Intermediate. Prospects of more crude oil flowing from Cushing Oklahoma to the US gulf coast is also seen as a factor causing Brent crude oil to lose some of its premium relative to WTI. Meanwhile, the cash market trade showed firm demand for Brent forties, with bids at dated Brent plus $1.25, which put it at its highest valuation in ten months.

Oil Slips a Second Day in New York on U.S. Jobless Claims (Bloomberg)
Oil slipped for a second day in New York as more Americans than forecast filed applications for unemployment benefits last week and on concern that new budget legislation won’t reduce the deficit fast enough.
Prices dropped as much as 0.2 percent after the Labor Department yesterday said jobless claims rose 10,000 to 372,000. President Barack Obama signed the budget measure into law yesterday to undo automatic tax increases and spending cuts. Oil supplies fell to a two-month low, a Bloomberg survey of analysts showed before a government report today.
West Texas Intermediate for February delivery fell as much as 18 cents to $92.74 a barrel on the New York Mercantile Exchange and was at $92.79 at 8:02 a.m. in Singapore. Futures closed 20 cents lower yesterday after climbing to $93.12 a barrel Jan. 2, the highest settlement for a contract nearest to expiration since Sept. 18.
Brent for February settlement slid 33 cents, or 0.3 percent, to $112.14 a barrel on the London-based ICE Futures Europe exchange yesterday. The North Sea crude was $19.22 a barrel more than WTI. Trading volume in WTI was 68 percent below the 100-day average, while Brent was 1.1 percent below.
Prices trimmed losses yesterday after the American Petroleum Institute reported inventories dropped 12 million barrels last week to 358.5 million. The Energy Department is scheduled to release its weekly report two days later than usual this week because of the New Year’s holiday.
Oil stockpiles fell by 1 million barrels to 370.1 million in the seven days ended Dec. 28, according to the median of 10 analyst estimates. That would be a third weekly decline and the sixth drop in seven weeks.

Gold Seen Rallying From Worst Streak in Three Years: Commodities (Bloomberg)
Gold traders expect prices to rebound from the longest weekly losing streak in three years as mounting concern that U.S. lawmakers are doing too little to control the budget deficit spurs demand for a protection of wealth.
Twenty analysts surveyed by Bloomberg expect prices to rise next week, five were bearish and a further two were neutral. While hedge funds cut bullish bets to a four-month low last week as prices slid for a fifth week, investors are holding a near- record amount in gold-backed exchange-traded products that are now valued at $141.9 billion, data compiled by Bloomberg show.
Bullion is in its longest run of annual gains in at least nine decades as U.S. lawmakers this week passed legislation that prevented tax increases for most workers and delayed spending cuts by two months. The International Monetary Fund says the country’s debt ceiling ought to be raised “expeditiously.” While Credit Suisse Group AG yesterday said gold will average the most ever this year, it joined Goldman Sachs Group Inc. in predicting the 12-year bull market will probably peak in 2013.
“Euphoria over the fiscal-cliff avoidance could be short lived as all problems are not solved yet,” said Frederique Dubrion, the Geneva-based president and chief investment officer of Blue Star Advisors SA, which manages metals and energy assets. “There’s still a huge amount of debt. Gold is nobody’s liability, it’s the ultimate alternative currency.”

20130104 0932 Soy Oil & Palm Oil Related News.

Soybeans Drop to 6-Week Low as China Cancels Import; Corn Steady (Bloomberg)
Soybean futures tumbled to a six-week low after China, the world’s biggest importer, canceled its third U.S. purchase in two weeks, while prospects improved for Brazil’s crop. Corn was little changed.
China canceled 315,000 million metric tons of previous soybean purchases for delivery before Aug. 31, bringing the total to 1.155 million since Dec. 18, the U.S. Department of Agriculture said in a report today. Yesterday, the USDA’s Foreign Agriculture Service said Brazil’s harvest this year will jump 25 percent to a record 83 million tons, boosting exports 21 percent and overtaking the U.S. as the top shipper.
“The mindset is for bigger crops in Brazil to reduce Chinese demand for U.S. soybeans,” Jerry Gidel, the chief feed- grain analyst for Rice Dairy LLC in Chicago, said in a telephone interview. “The market is adjusting to slowing demand.”
Soybean futures for March delivery dropped 0.5 percent to $13.8475 a bushel at 10:12 a.m. on the Chicago Board of Trade, after touching $13.725, the lowest since Nov. 16. Soybeans rose 17 percent in 2012, after drought cut production to a four-year low in the U.S.
Corn futures for March delivery rose 0.1 percent to $6.9175 bushel in Chicago, after touching $6.85, the lowest for a most- active contract since July 3. Last year, the price gained 8 percent, the fourth straight increase, after a drought cut U.S. production.
Corn is the biggest U.S. crop, valued at $76.5 billion in 2011, followed by soybeans at $35.8 billion, government figures show.

Soybean Complex Market Recap (CME)
January Soybeans finished down 2 1/2 at 1403, 4 1/2 off the high and 16 3/4 up from the low. March Soybeans closed down 4 3/4 at 1387 1/2. This was 15 up from the low and 9 1/4 off the high.
January Soymeal closed down 1.5 at 405.6. This was 5.9 up from the low and 2.3 off the high.
January Soybean Oil finished down 0.31 at 50.21, 0.38 off the high and 0.11 up from the low.
March soybeans are trading 5 cents lower into the closing bell but settled well off the session lows of the day. The sentiment favored the bear camp for most of the day after wires reported that China canceled another 315,000 tonnes of US soybean purchases for the 2012/13 marketing year this morning. Harvest has begun in Brazil and yields so far have been favorable. Some are now even suggesting that demand is slowly being shifted to South America due to cheaper prices and expectations that new crop soybeans will be available for export very soon. A dry period will extend into the end of this week for Argentina but rainfall is set to return early next week. Brazil conditions remain in good shape with the exception of northeastern Brazil but weather maps suggest a slightly better chance of rainfall for the region in the 6-10 day outlook. Early harvest has begun in Mato Grosso and conditions are exceptional at the moment. Additional sell pressure was due to the negative technical outlook for soybeans at the moment.

EDIBLE OIL: Malaysian palm oil futures edged lower after prices climbed to a two-month high the previous day, although hopes of a new export tax structure boosting demand had curbed losses. (Reuters)