Japan shares Switzerland’s concerns over the deleterious impact that excessive currency strength represents for its domestic economy. Its determination this year to thwart the flood of safe-haven flows into its currency has been relentless, if unsuccessful. Back in August, it spent close to USD 60bln in a burst of shock-and-awe that was rapidly absorbed by willing yen-buyers. In March, Japan convinced the G7 to undertake co-ordinated intervention to prevent sudden yen strength in the aftermath of the earthquake and subsequent tsunami. Last month, the MoF announced that the fx-intervention fund’s borrowing capacity would be tripled from just under USD 200bln to USD 600bln. Overnight, the government has detailed a fresh package of measures designed to enable companies to cope with the high level of the yen, including USD 6.5bln of subsidies for companies that are prepared to build new factories in Japan and an extra USD 2.6bln of subsidies for energy-saving technology. Unfortunately, yet again, the currency has been unresponsive to these latest measures.
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October 21, 2011 9:27 AM CEST
G10 Advancers and Decliners vs USD
JPY0.12
SEK0.10 AUD0.01
CAD-0.09 EUR-0.12 NZD-0.12 DKK-0.13 NOK-0.14 GBP-0.15 CHF-0.56
Todays Calender
Estimates
Previous
Country / GMT
Currency Tech
EURUSD
R 2: 1.3865
R 1: 1.3685
CURRENT: 1.3775
S 1: 1.3655
S 2: 1.3565
GBPUSD
R 2: 1.5940
R 1: 1.5855
CURRENT: 1.5754
S 1: 1.5630
S 2: 1.5520
USDJPY
R 2: 77.85
R 1: 77.45
CURRENT: 76.73
S 1: 76.30
S 2: 76.10
AUDUSD
R 2: 1.0440
R 1: 1.0399
CURRENT: 1.0212
S 1: 1.0102
S 2: 1.0000
Market Brief
Risk appetite in FX markets has managed to stabilize overnight in the face of concerning headlines from Eurozone. In a worrying move Eurozone officials have scheduled a second summit for Wednesday Oct. 26th, alongside the one planned for Sunday Oct. 23rd . The additional meeting clearly indicates the complexity involved in creating this grand plan. Yesterdays headlines were confusing, to say the least, but the primary takeaway is the European policymakers are moving towards a solution although it will take longer than the market had originally anticipated. According to a draft statement from Eurozone Finance Ministers they expect to finalize the agreement on a permanent bailout mechanism by the end of November. And for this selling of FX risk was held to a minimal.
Asian equity markets are in mixed with the Nikkei trading down 0.05% whilst the Hang Seng is higher at 0.45%. FX markets have taken a wait and see approached settling into comfortable ranges ahead of this weekend. In the FX space, EURUSD consolidated between 1.3760 and 1.3800 and AUDUSD traded between 1.0200 and 1.0260. After a steep drop to 1.2207 as traders pared down expectations for a new “floor” EURCHF seems content to 1.2270. As for today, FX traders remain cautions as German policy makers continue to downplay expectations for this weekend summit. Baring any further significant developments on the European sovereign debt front, we suspect FX, will discount the economic calendar, and linger in there current tight ranges.
Of all the rapid fire news flow it was the leaked Troikas report that truly captured our attention. Amidst all the electrifying images of protests in Athens, the EC, IMF and ECB commission provided its own sensational new by concluded that Greece’s debt dynamics are not sustainable. However, the Troika still recommended that the 6th tranche should be released regardless. In other news the Greek parliament passed the latest Bill on austerity measures. But there was an immediate price, as the lone dissenter from Prime Minister Papandreou’s parliamentary party was quickly dispelled. This now cuts the new social democrats parliamentary majority to just three seats. In other, news a draft paper of the EFSF bank recapitalization suggests a core focus on the financial sector revitalization. Guidelines seem to state that banks eligible for recapitalization would need to restructure, and only ailing banks that pose systemic risk would received assistance.
Coming up in today’s session, the economic calendar picks up with Switzerland’s SNB Publishes Monthly Statistical Bulletin, German ILO, Euro-Zone Govt Debt / GDP Ratio, Canada CPI Core and the critical start to the Euro-Area Finance Ministers summit.
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<!–TITOL:
Forex: EUR/USD bounces up to 1.3790
FITITOL–>
FXstreet.com (Barcelona) – The Euro has moved back and forth during European trading session, retreating from 1.3800/10 area at the opening times, to bottom right above 1.3700 and bounce back through the session, erasing previous losses, to reach 1.3790.
On the upside, immediate resistance lies at 1.3800/10 (session highs), and above here, 1.3870 (Oct 19 high) and 1.3940 (Sept 9/15 highs). Support levels remain at 1.3700 (day low), and below here, at 1.3650 (Oct 18/20 lows) and 1.3565/85 (Oct 11/12 lows).
On a wider perspective we can observe the pair trading on consolidation for the last seven days, trapped between support zone at 1.3650 and resistance at 1.3865/1.3915 area, with technical indicators showing no direction in 4-hour charts, probably awaiting for the outcome of Sunday’s EU summit.
CATHERINE RAMPELL
Dollars to doughnuts.
As Rich Oppel and I wrote in an article today, the Republican presidential candidates have been steadily promoting flatter — and therefore more regressive — tax overhaul plans. Flatter taxes have of course always been the holy grail for many in the conservative base, but now such proposals seem to be gathering broader support, too.
In a recent article for Scientific American, Ilyana Kuziemko and Michael I. Norton write:
Support for redistribution, surprisingly enough, has plummeted during the recession. For years, the General Social Survey has asked individuals whether “government should reduce income differences between the rich and the poor.” Agreement with this statement dropped dramatically between 2008 and 2010, the two most recent years of data available. Other surveys have shown similar results.
The article notes that declines in support for redistributive government policies have been larger among minorities, and that “Americans who self-identify as having below average income show the same decrease in support for redistribution as wealthier Americans.”
These findings are a bit unexpected, given the spreading Occupy Wall Street movement and frequent complaints about rising inequality.
Ms. Kuziemko, a professor at Princeton, and Mr. Norton, a professor at Harvard, argue that greater opposition to redistributive policies may actually be a predictable reaction to having slipped in the distribution oneself:
People exhibit a fundamental loathing for being near or in last place — what we call “last place aversion.” This fear can lead people near the bottom of the income distribution to oppose redistribution because it might allow people at the very bottom to catch up with them or even leapfrog past them.
This statement is based on a study of theirs based on survey data. The surveys found that people making just above the minimum wage are the most likely to oppose an increase in it.
REDMOND, Wash. — Microsoft’s earnings for the latest quarter edged up 6 percent to match analyst estimates.
The results for the July-September period were highlighted by revived growth in the division that includes the software maker’s Windows franchise. It’s the first time that Microsoft has posted a year-over-year gain in Windows revenue since the end of 2010.
The results for the July-September period were highlighted by revived growth in the division that includes the software maker’s Windows franchise. It’s the first time that Microsoft has posted a year-over-year gain in Windows revenue since the end of 2010.
The company, which is based in Redmond, Washington, also narrowed its losses in its online division, which has struggled to catch up to Google Inc. in the Internet’s lucrative search advertising market.
Microsoft Corp. earned $5.7 billion, or 68 cents per share, for its fiscal first quarter. That compared with net income of $5.4 billion, or 62 cents per share, at the same time last year. The earnings matched the average estimate among analyst surveyed by FactSet.
Revenue increased 7 percent from last year to $17.37 billion — about $130 million above analyst forecasts.
By surpassing Wall Street’s revenue hurdle, Microsoft achieved something that eluded nemesis Apple Inc. during the same period.
Although Apple’s revenue in the most recent quarter surged 39 percent from year, the increase didn’t measure up to analyst expectations. The shortfall triggered a sharp drop in Apple’s stock price.
But investors didn’t’ immediately reward Microsoft for its showing either. The software maker’s shares fell 36 cents to $26.68 in extended trading.
Microsoft’s stock price has been held back by worries that it isn’t adapting quickly enough as more people use smartphones and computer tablets such as Apple’s iPad instead of desktop and laptop computers that run on the Windows operating system. Three consecutive quarters in declining Windows revenue reinforced those concerns.
In the latest quarter, though, revenue in the Windows division crept up nearly 2 percent $4.87 billion. The modest gain was slightly below the 3.2 percent to 3.6 percent rise in personal computer shipments during the quarter, based on estimates by Gartner Inc. and IDC.
A Long Island credit union, seeking to capitalize on growing antibank sentiment, is offering new customers guaranteed “fee free” checking accounts — for life.
Bethpage Federal Credit Union says that effective immediately, new customers opening a Bethpage Bonus checking account can be assured of a lifetime of no debit card fees, no monthly maintenance fees, no transaction fees, no minimum balance fees and no fees charged by Bethpage for use of other banks’ A.T.M.’s. Plus, there are no fees for online, mobile or telephone banking.
Really? Absolutely no fees? For life? Guaranteed? “There are no caveats,” Kirk Kordeleski, the credit union’s president and chief executive, said in a telephone interview.
Well, almost none. The fine print on the credit union’s Web site notes in part, “Fees associated with insufficient funds will apply as necessary.” So, yes, there can be at least one fee — if you sign up for overdraft protection and overdraw your account by more than $20 when making a debit card purchase. (That fee, though, is $10 — roughly a third of the typical overdraft fee charged by big banks.)
Making the offer isn’t that big of a leap for Bethpage, Mr. Kordeleski said, because it already wasn’t charging most of those fees anyway.
The move is a savvy marketing ploy by the credit union, which has already seen an influx of new accounts. Since Bank of America announced its monthly debit card fee, the credit union has opened 1,500 new checking accounts — double the typical amount for a three-week period. A special Web site urges consumers to give their banks a “pink slip,” and offers a $25 incentive for turning in checks or debit cards from their old banks.
The checking account offers a 1 percent annual percentage interest rate, as long as customers use direct deposit, use online banking and make at least 15 debit-card purchases a month. Bethpage also offers better-than-average rates on its certificates of deposit. It is currently offering 0.90 percent on a one-year certificate of deposit, and 0.70 percent on a six-month C.D. Bankrate.com says the national averages for those C.D.’s are 0.36 percent and 0.23 percent, respectively.
Membership in the credit union, according to its Web site, is open to anyone who “lives, works, worships, attends school, regularly conducts business in Nassau or Suffolk County, or is an immediate family member of a current member.”
Are credit unions like Bethpage looking more attractive to you?
By J. Scott Applewhite, AP GE CEO Jeffrey Immelt, left, and plant manager Kevin Sharkey, right, give President Barack Obama a tour of a GE plant in Schenectady, N.Y.