2330 GMT [Dow Jones] Indonesia economy needs policy tightening, says Brown Brothers Harriman, but policy makers there have been sanguine about inflation risks. Notes finance minister Martowardojo said he's confident inflation will stay within 4-6% target range for year, but BBH says "we are not so sure." June CPI +5.1% on-year, core inflation at 4% on-year, highest since January and rising. Says "market is looking for a fourth-quarter hike, but we think it could come in the third quarter if inflation continues to rise." Says IDR benefits from combination of strong growth, high interest rates. USD/IDR's "9,000 level has proven tough to crack, but if risk appetite continues to pick up, it's only a matter of time before it breaks. After that is the May 2007 low of 8,650, but markets will be very nervous as the rupiah strengthens as the risk of capital controls rises if we break 9,000." USD/IDR last at 9,050.
0033 GMT [Dow Jones] Kospi +0.6% at 1709.07 as investors focus on expectations of strong 2Q results from major companies rather than concerns of possible global double-dip recession; "As U.S. banks are likely to post strong earnings results next week, further rallies in the U.S. markets may lead to an additional rise here," says Kim Jung-hoon at Korea Investment & Securities; tips 1720 as resistance today. Leading gainers include banks, tech, automobile stocks; Woori Finance (053000.SE) +1.7% at KRW14,750, Samsung Electronics (005930.SE) +0.8% at KRW781,000, Hyundai Motor (005380.SE) +0.7% at KRW135,500.
0029 GMT [Dow Jones] Nikkei up 0.1% at 9546.68, but gains capped as investors await settlement of monthly Nikkei options today; market sentiment also soured by cut in full-year forecasts by Fast Retailing (9983.TO) and dilution fears from huge share offer plan by Inpex (1605.TO). "Nikkei made a sharp jump to the 9500 level yesterday but testing higher will be difficult as foreign investors' appetites are still not very strong," says Kazuhiro Takahashi, general manager at Daiwa Securities Capital Markets. Puts Nikkei range at 9450-9650 for today. Exporters extend gains on EUR/JPY's rise through 112 (now 112.26); Canon (7751.TO) up 1.9% at Y3,510, Sony (6758.TO) up 1.1% at Y2,449. Heavyweight Fast Retailing off 2.4% to Y12,420 (biggest single negative Nikkei contributor today). Inpex ask-only from open at indicated price of Y434,000 vs Y476,000 close yesterday.
0024 GMT [Dow Jones] KLCI likely to rise, buoyed by 3rd consecutive day of gains in U.S. stocks. "The overnight performance on Wall Street will help give investors more confidence in the sustainability of the current recovery in global markets," dealer says. KLCI tipped to test 1320 resistance, with any breach likely to fuel buying interest, paving way for test of 1335 (June high) in coming sessions; key index ended +0.3% at 1316.03. Banks such as Maybank (1155.KU) may rise on hopes of improved earnings from higher lending rates after central bank raised policy rate by 25 bps to 2.75% yesterday.
0000 GMT [Dow Jones] Singapore shares may continue to draw strength from another firm session on Wall Street, this time driven by positive U.S. jobs data, retail sales. STI set to head above 2900 for first time in May after closing +1.3% at 2897.15 yesterday. Still, AmFraser Securities strategist Najeeb Jarhom says index unlikely to make much headway after clearing 2900, with stiff resistance around 2920-2950, based on quarterly trends over last 10 years; "a study of the quarterly trends...from 1999 shows that consecutively higher peaks stretched for not more than five quarters, even during the historic 2003-2007 bull market." Notes STI has already achieved higher highs for past 5 quarters since bottoming out at 1455 in March last year. ES Group (5RC.SG) may be in focus as it debuts on SGX; IPO priced at S$0.24 each.
2319 GMT [Dow Jones] Nikkei likely to extend Thursday's sharp gains as euro strengthens further vs yen (EUR/JPY now 112.20) on reassuring comments from ECB President Jean-Claude Trichet on closely watched European bank stress tests. Kenichi Hirano, operating officer at Tachibana Securities, puts Nikkei's trading range at 9500-9750 vs 9535.74 close (+2.8%). "Whether the index can maintain its 25-day moving average (9675) through the close will be key to determining whether the market will move higher to 10,250 or return to the more worrisome 9000-9500 range," he says. Euro-sensitive shares like Sony (6758.TO) and Canon (7751.TO) likely to rise, helped by yen weakness. Nikkei 225 September futures ended Chicago trading at 9610 vs Osaka close at 9540.
0011 GMT [Dow Jones] RBS reiterates its 5300 year-end target for S&P/ASX 200. "Current risk aversion in the Australian equity market is a good investment opportunity, as FY11 earnings seem well supported," says broker. "We also believe global pressures, while significant, are manageable." Says the market appears to be excessively discounting equities, based on prevailing structural and cyclical risks. Sees corporate investment as the next global growth driver. Argues that global corporate health is now supportive of investment resumption, following a period of capex neglect. Australian equity consensus estimates appear both defensible and achievable to us, at 24% growth forecast for FY11." Forecasts 21% return in Australian equities to year-end, based on conservative PE multiple of 12.8 times and RBS top-down net profit growth forecast of 23% for FY11. Index last up 0.6% at 4381.7.
2357 GMT [Dow Jones] Several key factors supportive for base metals, says major market participant who asks not to be named. Gains for euro, last US$1.2697, in uptrend from US$1.2495 on Tuesday, gives market hope and improved sentiment, "while there is much anticipation of good Chinese import data." Buyers in China have increased bookings of spot copper imports since May as arbitrage has mostly stayed open for buying from LME, selling to Shanghai. European and U.S. equities rose on expectations forthcoming earnings season will be strong, while also adding support to base metals prices is continued decline in LME-approved warehouse stocks, market participant says. Aluminium stocks fell 5,675 metric tons at 4.4 million tons, copper down 350 tons at 439,000 tons. LME 3-month copper closed down $25 vs Wednesday's PM kerb at $6,615, while tin lost $95 at $17,550, but other metals posted small gains with aluminum edging $3 higher at $1,989, lead rising $33 at $1,828, zinc adding $1 at $1,854, nickel up $250 at $19,395.
2342 GMT [Dow Jones] Spot gold $1,197.20/oz early in Sydney, down $1.00 from late NY. Barclays Capital says gold pressuring trendline support from February lows at $1,183, capped by resistance area $1,205-$1,215; says such price action bearish, and a break below $1,183 would likely resume downtrend to $1,155-$1,165; points to various indicators and concludes risk is for a more protracted correction lower. "As a time target, using the June/July 2009 correction as a blueprint, we ideally expect an important base to form later this month," it adds.
2312 GMT [Dow Jones] EUR/JPY may rise slightly in Asian trading session as regional shares likely to follow New York stocks higher, which "may alleviate excessive pessimism over the worldwide economy," says Tokyo bank trader. But hard for EUR/JPY to rise past 112.80 as Japan exporters expected to sell around that level, pair could also be weighed by short-term players' profit-taking after it hit 2-week high overnight. Tips EUR/JPY support at 111.50 vs 112.23 last; EUR/USD pegged in 1.2600-1.2750 range vs 1.2690. Says considering lack of major data or events in U.S., players will likely watch Canada's jobless rate for June due at 1100 GMT to gauge timing of any BOC rate hike; data could impact CAD, other commodity-linked currencies like AUD, NZD and their crosses with JPY. Says USD/JPY may trade in 88.00-89.00 band vs 88.43 last.
2226 GMT [Dow Jones] AUD/USD targets 0.8859, thereafter could be in a new upward trend, says UBS FX Strategist Brian Kim. "Break of the level would turn odds in favor of a bullish trend." Last 0.8765. For EUR/USD, targets 1.2807 then 1.3094, support at 1.2480. Last 1.2692.
2143 GMT [Dow Jones] AUD/USD is within striking distance of 0.8791 overnight high, thereafter next ceiling is June 21 high of 0.8859, says RBC Capital Markets FX Strategist David Watt. Notes improving risk backdrop should help AUD. "Indicators of risk aversion are on the cusp of tipping over to risk seeking for the first time since early May." AUD/USD last 0.8766.
0049 GMT [Dow Jones] USD/JPY seesaws around 88.50 amid quiet FX market; "after the dollar-yen's sharp gain yesterday, players don't have a clear incentive to lift the dollar further for now," says major Tokyo bank dealer. USD/JPY may not rise above 88.80 in Asian trading as Nikkei rises stay small (now +0.09%); says resistance for USD/JPY at 89.00 in global day. EUR/JPY's upside also top-heavy due to Japan exporters' selling demand around 112.00. EUR/JPY last 112.25.
2055 GMT [Dow Jones] EUR/USD gaining as "market gripped still by a weakening USD," says Bank of NZ. Says possibility of more aggressive longer-term liquidity additions at ECB being ignored for now. Also, IMF report suggesting USD overvalued, Fed could indicate rates will stay lower for longer adding to pressure on greenback. Pair now closing in on targeted 1.2700-1.2800 area, last 1.2698 after touching 2-month high of 1.2713 overnight. Says EUR/GBP "remains a strategic sell at current levels with good resistance between 0.8400-0.8425," last 0.8375.
2002 GMT [Dow Jones] Despite better-than-expected weekly jobless claims data, fed-funds futures traders continued to reduce their bets for the FOMC to raise the short-term funds rate in 1Q 2011. Mar '11 contract priced in a 46% chance for FOMC to lift funds rate to 0.5% at Mar. 15 meeting. That's down from 50% chance Wed, and 71% chance only a week ago.
1729 GMT [Dow Jones]"From a global perspective, the dollar looks set to trade weaker again in coming weeks and months," said analysts at Nomura Securities. The USD outlook for H2 2010 is "weak, as "the U.S. growth picture has deteriorated significantly in recent weeks and positions are very long USD by historical standards," said Nomura, adding that markets are likely to show more willingness to invest in riskier assets in the coming months. Analysts project that USD will fall against currencies tied to global growth such as CAD and EUR, but gain against the safe-haven yen.
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