Dollar edges up after rout vs. euro, yen

The U.S. dollar was recovering from its drop against most major rivals Friday following global-slowdown concerns that led investors to shove the greenback lower.

The ICE dollar Index DXY +0.02% , a measure of the U.S. unit against six other major currencies, rose to 80.517, up from 80.442 late Thursday in North America. The WSJ Dollar Index XX:BUXX +0.13%  , a rival measure of dollar strength, rose to 74.13 from 74.04.

Against the Japanese yen USDJPY -0.04% , the dollar was buying ¥103.40, up from ¥103.10 late Thursday. The dollar slid more than 1% to below the ¥104 level on Thursday in the wake of an unexpected contraction in China’s manufacturing sector in January, as well as a decline in an preliminary gauge of U.S. manufacturing to a three-month low this month, with some of the slowdown stemming from cold weather.

“Heightened risk aversion was responsible for the sharp distinction in currency performance on Thursday,” including a more than 1% rise for the euro against the dollar and a gain of around 1.6% for the Swiss franc, Itaú BBA fixed-income strategy Pablo Salgado said in a note Thursday.

The euro EURUSD -0.04%  gave up some ground Friday, fetching $1.3682 compared with $1.3691, while the Swiss francUSDCHF +0.04%  eased as the dollar won back some of its prior-session decline to buy 0.8998 franc versus 0.89761 franc.

The British pound GBPUSD -0.03%  , however, was little changed at $1.6635, after breaking above the $1.66 level for the first time since May 2011.

But the Australian dollar AUDUSD -0.79% couldn’t shake off its 1.1% fall on Thursday, sitting unchanged at 87.64 U.S. cents. The Australian dollar was hit following the data from China, which is Australia’s largest export market.

With “tentative signs of softening activity at the margin,” in the U.S., the jump in risk aversion has been “fueled by the growing perception that some emerging markets are particularly fragile,” wrote Itaú’s Salgado.

He also outlined country-specific issues that are rattling emerging-market currencies, including a 15% slide in Argentina’s peso USDARS +0.01%  after the central bank eased off its intervention efforts to prevent foreign reserves from declining further.

Emerging-market stocks were also hit hard Thursday, leaving the MSCI Emerging Markets Exchange-Traded Fund EEM +0.15%   at a four-month low .

Gold dips after hitting two-month highs

 Gold prices fell just fractionally on Friday, giving back a small chunk of their hefty gains from the prior session, when a drop in the equity market sent investors scurrying for the perceived safety of the precious metal.

In electronic trade, gold for February delivery GCG4 -0.21%  was down $2.90, or 0.2%, at $1,259.40 an ounce. March silver SIH4 +0.03%  turned lower, slipping 1 cent to $20 an ounce.

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Gold on Thursday spiked to its highest close in more than two months, riding not only the retreat stocks, but also a weaker dollar DXY +0.01% and the prospect of India easing curbs on imports.

The gold ETF GLD -0.11%   broke through levels not seen since Dec. 10, and moved well above its 50-day moving average.Read more from The Tell .

Separately, platinum for April deliveryPLJ4 -0.21%  on Friday shed $4.90, or 0.3%, to $1,458.30 an ounce, though the direction could change if a labor strike in South Africa lingers.

“The radical AMCU union, which represents the majority of workers in the platinum mining industry, is demanding that wages be more than doubled,” said Commerzbank’s Eugen Weinberg. “The strikes are to continue until such time as these demands are met. This could noticeably tighten the situation on the global platinum market.”

Elsewhere in metals trading, March palladium PAH4 +0.28%  added $2.05, 0.3%, to $747.95 an ounce. High-grade copper for March delivery HGH4 +0.37%  gained a penny to $3.30 a pound. 

U.S. stocks fall on China worries; Dow at 5-week low Manufacturing contracts in China; gold and Treasurys rally

U.S. stocks closed sharply lower on Thursday as weak economic data from China prompted investors to sell resource stocks and emerging-markets assets and seek safety in bonds, gold, and high-dividend paying sectors.

The S&P 500 SPX -0.89%  fell 16.40 points, or 0.9%, to 1,828.46, breaking a two-day winning streak. Losses were led by financials and materials sectors. Only telecoms, a sector whose stocks are known for their dividend yields, ended higher. The benchmark index is down 1.1% year-to-date.

The Dow Jones Industrial AverageDJIA -1.08%  fell to a five-week low, shedding 175.99 points, or 1.1%, to 16,197.35. The blue-chip index recorded its third straight session of losses.

The Nasdaq Composite COMP -0.57% lost 24.13 points, or 0.6% to 4,218.87, trimming gains it clocked in since the start of the year. Read the recap of the stock market live blog.

Indexes suffered broad-based losses amid high trading volumes. Thursday’s total composite volume was the largest this year, as more than 7.3 billion shares changed hands, according to FactSet.

Investors appeared most worried about the surprise contraction in China’s manufacturing sector, which followed concerns over the country’s financial system. On Tuesday, China’s central bank announced it is injecting more liquidity into the system ahead of the Lunar New Year holiday.

“China’s banks have been having liquidity issues since last summer, and what worries investors is contagion. If their problems are severe, large banks in the U.S. and Europe will be affected, triggering another crisis,” said Quincy Krosby, market strategist at Prudential Financial. “What is happening in the U.S. stock market is consolidation and realization that the Fed is not going to come to the rescue of the markets with liquidity anymore, as the economy is growing again.”

Gold closed at a two-month high and Treasurys rallied, sending yields lower. The concern about China, alongside expectations the Federal Reserve’s monetary tightening would lead to higher U.S. interest rates, hit emerging markets assets hard. The ETF tracking the benchmark MSCI Emerging Markets index EEM +0.15%  closed at a four-month low.

Among the day’s other economic data, an early gauge of U.S. manufacturing dipped in January from the prior month, but some of the slowdown was due to cold weather, Markit reported Thursday. The U.S. flash purchasing managers index slipped to 53.7 in January, down from December’s level of 55, which was an 11-month high. This is the slowest improvement in conditions since October.

U.S. initial jobless claims rose slightly to 326,000. “Today’s jobless claims data had a worrying component — continuing claims stayed above 3 million. Investors are concerned about the labor market and it is showing in today’s selloffs,” said Chris Gaffney, senior market strategist at EverBank.

The leading economic index rose 0.1% in December, marking its sixth gain in a row, the nonprofit Conference Board said Thursday.

In the housing sector, sales of existing homes rose 1% in December to a 4.98 million annual rate, while the median sale price climbed 9.9% to $198,000.

In earnings news, McDonald’sMCD +0.46%  reported nearly flat earnings in the fourth quarter, as sales edged down slightly while expenses rose. Earnings per share were $1.40, slightly ahead of consensus expectations. Chief Executive Don Thompson called 2013 “a challenging year.” Shares in the fast-food chain ticked up 0.5%.

Shares in Netflix Inc. NFLX -0.02% rallied 16.5% after the video streaming company reported better-than-expected earnings late on Wednesday.

Herbalife Ltd HLF -0.30%  shares slid 10% after U.S. Sen. Edward Markey, a Democrat from Massachusetts, on Thursday called for an investigation of the business practices of the company, which he called “a possible pyramid scheme.”

Santander Consumer USA Holdings SC +0.36%  climbed 5% on its debut, after the auto lender sold 74 million shares at $24, raising $1.8 billion.

In after-hours market, shares in Starbucks Corp. SBUX +1.17%  rose 0.7% after the coffee-shop chain reported quarterly earnings above analysts’ expectations.

Microsoft Corp. MSFT +3.51% shares rallied 3.7% in the after-hours market, after thecompany reported better quarterly earnings and revenue than analysts expected.

Gold moves lower for third-straight session

Gold for February deliver GCG4 -0.15% dipped $5.30, or 0.4%, to $1,233.50 an ounce. March silver SIH4 -0.37%  lost 13 cents, or 0.7%, to $19.71 an ounce.

There hasn’t been much in the way of economic data to push and pull gold prices, but that could change on Thursday, with weekly jobless claims, the Markit “flash” U.S. PMI, existing home sales and leading indicators all set to be reported. Read: Spotlight on the economy .

A day earlier, gold wilted under the pressure of some bearish bank comments, closing lower for the second-straight day after showing some life last week.

The banks are “basing this on an economic recovery, with interest rates gradually working their way higher throughout 2014, which creates a scenario where gold — a non-performing asset — doesn’t have the allure that it had in this recent cycle,” said Peter Hug of Kitco News.

“I’ve been looking at $1,255 being breached on the upside with some momentum, but it’s just not been able to do it,“ he said, adding that the gold market “feels heavy.”

Elsewhere in metals trading, platinum for April delivery PLJ4 -0.86%  sank $11.70, or 0.8%, to $1,450.70 an ounce with South African strikes at platinum mines set for a strike on Thursday.

March palladium PAH4 -0.55%  lost $3,80, or 0.5%, to $745.05 an ounce. High-grade copper for March HGH4 -0.63% gave up two cents, or 0.5%, to $3.32 a pound.

The big story of 2013: Huge growth in China metal ore, concentrate imports

China's processing industry continued to expand and domestic producers built stocks to ensure against shortages due to factors such as the Indonesian ban on ore exports, Barclays said.

China's metal import highlights:
-Aluminium bauxite imports were up 79% year- on- year to a record of 71 Mt in 2013 with 70% comin g from Indonesia.

-China bauxite stocks should move into surplus in first half of 204 and hence dampen the need for imports. January data should show sharp fall in imports in January

-Copper concentrate imports shot to record high of 1.039 Mt in December as buyers took advantage of the big rise in TC/RC during the final months of 2013 and plentiful availability of concentrate.

-Present market balance suggests China's net copper refined copper import requirement will fall 14% this year, with much of the drop happening in H1 14

-Lead concentrate imports were 18% lower on annual basis in 2013 in view of surplus in market, imports may not recover soon

-Nickel concentrate imports rose 14% y-o-y, 58% came from Indonesia ahead of ban. China's estimated 30 Mt stock is sizeable enough to meet demand for modest rise in Nickel Pig iron output in first half of 2014.

-Zinc concentrate imports were up 3% y-o-y, imports could ease back in early 2014
- Net refined tin imports were weakest in 2013 and for the whole year, imports fell 54%

Gold futures push back from losses

Gold nosed slightly higher on Wednesday, halting its decline a day earlier when the International Monetary Fund raised its global growth forecast for the first time in almost two years.

In electronic trade, gold for February delivery  was up $1.50, or 0.1%, to $1,243.30 an ounce. March silver  tacked on 6 cents, or 0.3%, to $19.93 an ounce.

Gold on Tuesday gave back a big chunk of the gains that brought it to five-week highs as the dollar  strengthened and as bearish forecasts for the year took their toll.

“The gold market bears have the overall technical advantage,” Kitco’s Jim Wyckoff said. “However, if the bulls can manage to post decent gains by the end of this week, they would gain good upside momentum to suggest the three-week-old uptrend on the daily bar chart can be sustained.”

Elsewhere in metals trading Wednesday, platinum for April delivery  was back in the green, up $5.80, or 0.4%, to $1,459.40 an ounce ahead of planned labor strikes in South Africa on Thursday. March palladium  added 45 cents, or 0.1%, to $748.40 an ounce.

High-grade copper  for March deliver was flat at $3.35 a pound.

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Experts see D.C. deal on debt limit — but can’t figure out how

Forget another big scare over the U.S. debt ceiling. Democrats and Republicans will soon strike a deal to raise the amount the federal government can borrow and squash any chance of a crisis.

That’s the conventional wisdom (again) in Washington. Republicans would rather keep the focus on what they perceive as the Obama White House’s haplessness, analysts say, instead of highlighting divisions within conservative ranks, especially with the midterm elections approaching. Conservatives have a chance to retake control of the Senate.

Bloomberg

Can Washington avoid another crisis?

In the “buildup to November’s mid-term elections, we expect another suspension of the debt ceiling without a major fight,” the Wall Street firm Morgan Stanley told clients.

What the so-called experts can’t quite figure out is how the deal will come about once the debt limit is set to be reached again – technically on Feb. 7 but the Treasury probably can manage the situation until the end of the month.

“There is virtually no chance of a U.S. default or any material credit event, but there is not yet a clear path to a deal,” according to an analysis by the Washington office of the Eurasia Group, a global political and economic consulting firm.

The one worry among political cognoscenti is that the symbolic to-and-fro over the debt limit could accidentally turn into full-fledged fight.

A large coterie of House Republicans, for example, still want to make a ritualistic display of opposition to show conservative voters they are not giving in without a fight. They are sure to demand some concessions from the White House, perhaps approval of the Keystone pipeline or delay in some aspects of Obamacare.

Yet Democrats are certain to balk since they did so successfully in the last round of fighting.

What to look for? Watch what President Obama says about the debt ceiling on Jan. 28 during his annual State of the Union address. And pay attention to the response by top Republicans after the party’s annual retreat ends on Jan. 31.

Analysts forecast a corrosive year for copper prices

The outlook for copper isn’t very bright, with analysts expecting prices for the metal to fall this year.

Goldman Sachs analysts on Tuesday said they expects copper prices on the London Metal Exchange to average $6,850 per metric tons, or about $3.11 a pound this year. That’s down from an estimated average of $7,328 per metric ton, or $3.32 a pound in 2013.

The analysts see a surplus of 385,000 metric tons in 2014. “This reflects the strong growth in supply following a decade of mining capital expenditure, together with an anticipated strong ramp up in smelter output in 2014 and 2015.”

For 2015, they see a further price decline to an average $6,600 per metric ton.

On the LME, cash prices traded around $7,335. March copper HGH4 +0.02% traded on the Comex division of the New York Mercantile Exchange settled at $3.35 a pound,up less than a penny Tuesday.

When the U.S. Federal Reserve stops printing $80 billion a month to buy bonds, interest rates may jump, and that may stop the improvement in the U.S. housing industry and perhaps even trigger a recession, said Jeffery Born, a professor of finance at the D’Amore McKim School of Business at Northeastern University.

“This fear has pushed all but the most flush or optimistic corporations to sidelines, suggesting weak growth (if any) in manufacturing output for 2014, even if the end of QE isn’t announced this year,” he said.

“In this environment, my outlook for copper is pretty gloomy: sideways to downward price trends for the upcoming calendar year,” said Born.

Australia inflation data kicks currency higher

Australia’s dollar bucked almost a full U.S. cent higher after inflation surprised to the upside.

Unlike many of its Western peers, Australia reports its consumer and producer prices on a quarterly basis rather than every month, so the data set tends to be more of an event that it would be in the U.S. or Germany or such.

Wednesday’s release was no exception, juicing the Aussie dollar as markets decided the 2.6% seasonally adjusted gain was enough to keep the Reserve Bank of Australia from cutting interest rates anytime soon.

Commodities: Investor interest shows signs of picking up in 2014

The withdrawals in commodity investments were mainly on account of liquidation of gold exchange traded funds (ETFs). After adjusting for gold etf outflows, commodity investments witnessed inflow of $2 bn.

Afer a weak year for commodities when a net $36 bn was withdrawn from commodity investments-the largest total ever, 2014 promises to be a better year with several promising signs of a pick-up in investor interest recently, according to Barclays Research.

The withdrawals in commodity investments were mainly on account of liquidation of gold exchange traded funds (ETFs). After adjusting for gold etf outflows, commodity investments witnessed inflow of $2 bn.

Moreover, several institutional investors made decisions last year to exit the sector but are not due to do so until early this year.

Firtly, structured product issuance in commodities has started the year in a spectacular fashion with the issuance of the largest ever-SEC-registered palladium linked note, with a notional value of $61 mn, bearing single-handedly th total of palladium notes during the whole of 2013.

Secondly, positioning data show that in a number of key growth-sensitive commodities hedge fund and institutional investors have raised their exposure to the long side, suggesting a more positive attitude to potential fundamental developments this year. With a net position of 35,000 lots managed money futures positions on COMEX are at their longest since early 2011 when prices were hitting all-time highs above $10,000/t. Although COMEX is a relatively small market, the big move up in LME open interest (up by more than 10% since late December and a long way above the levels prevailing this time last year) suggests that there may be similar trends underway there as well.

Thirdly, the mood at several events held by Barclays for commodity investor clients over the past week or so was decidedly more positive than it was just a month or so ago, especially toward the base metals complex with debates focusing on the similarities between the current situation (end of a strong period of supply growth, early stage of economic recovery) and those preceding previous periods of price strength in the middle of each of the past two decades.

China GDP growth, factory data gives no room for optimism

China's GDP growth in 2013 at 7.7% gives no room for optimism for commodities complex and is at the same pace seen in the previous year, analysts said.

China GDP growth has been vital for several commodities in the metals, energy and agriculture complex in recent years. Commodities have witnessed a pull back on China factory output and GDP growth data last week and isn't quite positive for the market in the near to medium term.

Factory production rose by 9.7 percent in December, according to the National Bureau of Statistics .WTI crude Oil and LME copper fell on China data. 

China's commodity imports seem to have picked up towards December, there was broad-based expansion in imports of energy and metals commodities. This was driven by year-end restocking and financing-driven imports,however, full year growth was muted.

"Meanwhile the signs are that consumption of key commodities in China remains strong. The majority of base metals saw their demand growth rates slow in 2013, but they continued to exceed that of the broader economy. Oil demand growth showed some modest signs of slowing. At around 360kbpd, 2013’s expansion was less than 2012’s 400kbpd run rate, but a big improvement on 2011’s 270kpb,"according to Barclays Research.

India-UAE sign MoU for co-operation in Wind, Solar Energy

Dr. Farooq Abdullah briefed the UAE Minister on the progress made by India in renewable energy with special reference to the National Solar Mission launched in 2010 under the National Action Plan on Climate Change

India and UAE have agreed to promote cooperation in renewable energy, especially in the areas of solar energy and wind power. A Memorandum of Understanding (MoU) to this effect was signed in Abu Dhabi on Saturday,18th of January. The MoU was signed by Dr. Farooq Abdullah, Minister of New and Renewable Energy of India and Dr Sultan Ahmed Al Jaber, Minister ofState of UAE.

Both the countries also agreed to form a Joint Working Group for better coordination through joint research on subjects of mutual interest, exchange and training of scientific and technical personnel, exchange of available scientific and technologies information and data, organization of workshops, seminars and working groups, transfer of know-how, technology and equipment, on non-commercial basis etc.

Dr. Farooq Abdullah briefed the UAE Minister on the progress made by India in renewable energy with special reference to the National Solar Mission launched in 2010 under the National Action Plan on Climate Change. He also briefed the Minister on India’s efforts in promoting energy for remote and un-electrified areas.He congratulated the UAE for warm hospitality extended during the 4th Assembly session of IRENA.