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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: RealMuLan who wrote (22254)	1/26/2005 6:39:01 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

Dollar accelerates China-prompted decline [What do you make of this Yiwu? Hot air? Mish] Wednesday, January 26, 2005 7:33:37 PM By Jamie McGeever NEW YORK, Jan 26 (Reuters) - The dollar weakened further on Wednesday, deepening its earlier decline amid momentum-driven trading after China reignited market talk of a currency revaluation. China on Wednesday said it would discuss its pegged yuan at next week's meeting of the Group of Seven rich nations in London. This appeared to signal a slightly different position from only a day earlier, when a senior Chinese official indicated any move on the yuan <CNY=> might be some way off. With talk of a potential yuan revaluation back on the table, the dollar came back under selling pressure. "That was the trigger that pushed the dollar down in Asia, but (the decline) has extended in U.S. hours," said Greg Anderson, senior currency strategist at ABN Amro in New York. Technical factors, particularly in euro trade against the dollar, gave the market extra impetus, he said. Ahead of potentially major market-moving events next week, such as the G7 meeting, U.S. employment data and the Federal Reserve's interest rate decision and accompanying statement, the market is bouncing around without any real direction or conviction. The dollar's gains on Tuesday were being wiped out today, noted Nick Bennenbroek, senior currency strategist at Brown Brothers Harriman in New York. "The market's been a bit choppy the last few days and maybe it's a bit indecisive," he said, also noting good demand for euros whenever the currency falls below $1.3000. By mid-afternoon in New York, the dollar was down over 1 percent against the yen at 102.94 yen <JPY=>, while the euro was down at 134.70 yen <EURJPY=>. The euro gained around 1 percent against the dollar to $1.3085 <EUR=>. Sterling, lifted by above-consensus U.K. economic growth data and relatively hawkish minutes from the Bank of England's Monetary Policy Committee, was also up 1 percent at $1.8831 <GBP=>. Against the Swiss franc <CHF=>, the dollar weakened to 1.1832 Swiss francs. A relatively sluggish U.S. Treasury auction also helped keep the dollar under selling pressure, analysts said. Demand for the $24 billion of five-year notes was fairly meager, especially so from indirect bidders, which include foreign central banks. They took up only 28.6 percent of the sale, down by more than half from the end of last year and the lowest since August 2003. CHINA, G7 STILL KEY On Wednesday, a senior official said China's finance minister would attend the G7 talks and that there would be a "deep dialogue" on issues including the yuan, which China has pegged at 8.28 to the dollar since the mid-1990s. But the previous day, another senior Chinese official had said his country needed time to prepare to make its currency more flexible and that conditions for exchange rate adjustments were not right. "The continued speculation about the currency peg is putting pressure on the dollar against the yen," said Omer Esiner, market analyst at Ruesch International in Washington. Also on Wednesday, a G7 official said the group intends to to use language that would be identical to that used at their meeting last February in Boca Raton, Florida. The news fueled some modest dollar buying. Earlier, U.S. President George W. Bush added to international pressure on China to revalue its currency, effectively saying in a press briefing that countries should adopt market-based currency regimes. "In terms of the trade deficit, it is important for us to make sure that countries treat their currencies in market fashion, working with China in specific on that issue," Bush said. forexstreet.com

To: RealMuLan who wrote (22254)	1/26/2005 7:26:41 PM
From: mishedlo	Read Replies (1) \| Respond to of 116555

World´s largest uranium groups eye Australia´s WMC Resources assets - report Wednesday, January 26, 2005 10:37:53 PM World's largest uranium groups eye Australia's WMC Resources assets - report SYDNEY (AFX) - The world's two largest uranium groups have joined the hunt for a stake in WMC Resources Ltd's Olympic Dam copper uranium project in South Australia, The Australian newspaper reported, citing unnamed sources It said officials from Cameco Corp of Canada and Cogema of France are believed to have visited the remote project site in recent weeks Both companies are closely watching Switzerland-based Xstrata Plc's 7.4 bln aud battle to win control of the Australian miner, it said WMC is considering a 5 bln aud expansion of Olympic Dam, which contains about one-third the world's known uranium Meanwhile, Cameco, the world's biggest uranium producer, has lent support to claims by WMC Resources chief Andrew Michelmore that the uranium market will continue to strengthen Michelmore's heavy promotion of the uranium boom and its impact on WMC's value has come under attack from Xstrata chief executive Mick Davis But Cameco has provided support for the WMC view. Speaking after a mining conference in Vancouver, Cameco president Jerry Grandey said the group continues to expect "upward pressure on the price" "You can't have a world market using 180 mln pounds a year of uranium, producing just 100 mln (pounds) and not have the price response that becomes great enough to stimulate production," Grandey said adding the industry is still searching for an equilibrium price Spot uranium prices rose by 43 pct to 20.70 usd a pound last year. Grandey said the long-term or contract price is now 25 usd a pound. He said the difference between spot and long-term prices was the "biggest disconnect" that Cameco had seen forexstreet.com

To: RealMuLan who wrote (22254)	1/27/2005 1:04:18 AM
From: mishedlo	Respond to of 116555

China may raise banks' minimum reserves to curb money supply: analysts BEIJING : China may crack down on soaring inflows of hard currency by raising the minimum amount of deposits commercial banks must hold in reserve, analysts said. The move, which would be the third of its kind in the past 18 months, is creeping up on a list of likely policy responses to increasingly expensive weekly operations to soak up the excess money in the system, they said. "It does make sense at the margin," said JPMorgan economist Grace Ng. "You have this run-up in reserves and have to absorb more liquidity so the costs increase." The ongoing and seemingly unstoppable expansion of the Chinese economy is putting a growing strain on the country's central bank. A humming export sector, massive inflow of foreign investment and speculative money betting on a currency appreciation all boost liquidity to levels where the central bank has problems coping. This is because under China's US dollar peg, the central bank must issue around 8.27 yuan for every dollar which comes onshore in order to maintain the currency within its narrow trading band. The excess yuan are then mopped up, or sterilized, in weekly open market operations in which the currency is bought up by the central bank in exchange for government paper. But questions are cropping up about the cost of these operations, and Chinese financial officials have been complaining in recent months about the difficulties that they have been causing. The latest warning came last week from Zhang Xiaohui, head of the monetary policy department under the central bank. Foreign capital inflows have boosted money supply, and the central bank faces increasing pressure from the cost of weekly efforts to absorb them, Zhang told traders. In the second week of January, the central bank drained a record net 95 billion yuan cash from circulation, but in a surprise move, the central bank added a net 30 billion yuan last week. "This could be a signal that the central bank is about to raise the required deposit reserve ratio," Gao Zhanjun, an bond analyst at CITIC Securities said. A rise in the funds banks must keep in reserve to 8.5 percent of total deposits from the current 7.5 percent would have a dramatic effect. It would drain 100 billion yuan of cash from circulation, giving the central bank more breathing space, analysts said. Inflows and outflows are being watched more keenly this year in the light of the strains brought on by capital inflows. These were underlined by last year's massive 206.6 billion dollar increase in China's foreign reserves to 609.9 billion dollars. A currency revaluation could reduce the capital inflows, but the government has said repeatedly that it will not reward speculators. And some analysts maintain that a move to appreciate the yuan could only invite even more inflows in a repeat of the pattern which helped sink Asia's currency pegs during the late-1990s financial crisis. Others strongly disagree. "On the policy front, the government shouldn't delay any further adjustments, particularly with the exchange rate," said JPMorgan's Ng. "If it drags on too long, there is the risk of overheating further down the road." channelnewsasia.com