Month: September 2013

Source: Kevin Michael Grace of The Metals Report (9/3/13)

http://www.theaureport.com/pub/na/dave-forest-how-to-play-the-looming-platinum-supply-crisis

South Africa, platinum mining giant, is about to fall off the investment map, says Dave Forest of Pierce Points. Until the country sorts out its labor politics, there is a real need to establish alternative sources of platinum group metals, vanadium and manganese. In other words, while it’s a bad time to be a miner in South Africa, it’s a good time to hold in-ground reserves. In this interview with The Metals Report, Forest names deposits in the Americas and elsewhere in Africa with the potential to meet global platinum needs. But he’s choosing carefully, because even in times of scarcity, Forest argues, it just won’t do to develop anything other than the best, most economic mining projects.

The Metals Report: You recently wrote, “Many of the global threads in the minerals industry are today running through South Africa.” How crucial is South Africa to commodities and, especially, the so-called strategic minerals?

Dave Forest: There may be no other country that is as important to the mineral industry as South Africa in terms of across-the-board production share. It produces about 70% of the world’s platinum. There is no other major commodity that is so geographically concentrated. South Africa also produces a lot of the world’s strategic minerals, such as vanadium, manganese and titanium.

TMR: Nelson Mandela was close to death recently. Many have worried that his death will result in a civil crisis. What do you think?

DF: South Africa has so many unresolved systemic and structural issues. Mandela’s death could serve as a flashpoint. It could be a number of other things.

TMR: When you read about the president of the African National Congress (ANC) singing “Umshini Wami (Bring Me My Machine Gun),” this suggests a high possibility of political turmoil.

DF: Absolutely. The labor unions have been incredibly militant. The difference between what they’re asking for and what the companies are offering them is 150% compared to 5%. That’s a very big disconnect.

TMR: What is the significance of possible changes to South Africa’s Mineral and Petroleum Resources Development Act?

DF: The old minerals code has always been faulted for being vague. The government issued a new draft code last year. Mining companies raised somewhere in the neighborhood of 80 objections to different parts of the act and submitted them to the government. The revised draft released this summer ignored almost all of these objections.

TMR: When can we expect government action?

DF: Pretty soon. The government is taking comments on the revised act until Sept. 6. So we could see action this year.

TMR: How strong is resource nationalism in South Africa, particularly in government circles?

DF: South Africa has one of the highest electric-power costs on earth. So there is a lot of talk about coal, which is used to generate a good portion of this power, being declared a strategic material, if not outright nationalized. This would have a major effect on the global thermal market because South Africa is a pretty significant swing supplier, especially in the Indian Ocean and Asian spheres.

TMR: The National Union of Mine Workers (NUM) has announced a vote on possible strike action. How important would such a strike be?

DF: We had strikes over the last year. They had a material impact on the balance sheets of all the mining companies involved. You’re talking about losing a month or two of production. This is especially worrisome in South Africa because it has a lot of older, deeper mines. Once you turn off the switch, it gets harder to turn it back on. These mines need constant maintenance. If they don’t get that, you run a real risk of permanent operational damage.

TMR: Is South Africa on the verge of killing the goose that lays the golden eggs?

DF: The question is, how long until South African mining companies can operate profitably with the incentive to make the capital expenditures needed to maintain existing mines and develop new ones? In the long term, South Africa is going to be a very rich place. In the short term, we could see some significant dislocations.

TMR: How would you rate the prospects of South Africa’s various platinum group metals (PGM) companies?

DF: I think you can put most of the existing producers into the same basket. South Africa is a pretty high-capital place to operate. We’re talking deep mines to exploit fairly restricted layers, with high labor and energy costs. The only reason that conditions aren’t even tighter is that miners got a boost from the depreciation of the rand. PGM producers are going to have a tough time for at least the next year and possibly longer.

I’m a little more bullish on development stories. Now is a good time to hold in-ground reserves. I likeIvanplats Ltd. (IVP:TSX), which has a significant in-ground platinum reserves but isn’t being forced to spend the capital to develop and operate it now.

TMR: Any other examples of this?

DF: Zimbabwe, which was a country a lot of investors had written off, seems to be doing better than many South African operations now. And a company like Zimplats Holdings Ltd. (ZIM:ASE) (a subsidiary of Impala Platinum Holdings Ltd. [IMP:JSE]) might be better insulated as a result.

TMR: Do major producers such as Anglo American Platinum Ltd. (AMS:JSE) and Lonmin Plc (LMI:LSE)have escape routes?

DF: Their only option would be diversification outside South Africa. Right now, they don’t have that, and that’s as much a function of geology as of politics.

TMR: What is your advice for investors in South African PGM companies?

DF: I think if you’re a value investor, and you look at the margins that the sector as a whole is making—which translates into cash flows versus valuation—you probably wouldn’t want to be in the majority of those companies right now.

TMR: Should South African PGM mining become unproductive, where else in the world will we see major efforts to find PGMs?

DF: This is where it starts to get really interesting. You would expect to see a large demand for exploration prospects outside South Africa. But the known alternatives are Russia and Zimbabwe, not the most attractive destinations for capital. Beyond that, we know of a few places where lower-grade platinum is found, and we’re talking an order of magnitude lower. There’s a real need for exploration teams that can come up with new ideas about where richer platinum reserves might be found.

TMR: What about PGMs produced as byproducts from mining of other metals?

DF: The platinum produced as byproducts by companies in Ontario’s Sudbury district are probably the best prospects. But they are less likely to have a material impact on the supply balance because the amounts of PGMs you’re talking about are relatively small.

TMR: There is quite a divergence of opinion about Ontario’s potential, in places like the Ring of Fire district. Some say it will be a huge development for decades to come, while others say it’s hype. What do you think?

DF: Ontario has some of the more interesting magmatic-sulphide deposits on the planet. It has potential. But you’re talking about a system that’s more linked to the fates of metals such as chromite and nickel. I don’t see it being a significant player in terms of platinum group elements (PGEs).

TMR: If South African production of vanadium and manganese becomes unproductive, which regions will step up as replacements?

DF: Three countries—South Africa, China and India—produce most of the world’s vanadium. Unlike platinum, we do know of a few places on earth where we have South African-like deposits of vanadium. A company like Largo Resources Ltd. (LGO:TSX.V) in Brazil is probably in a good position. It is developing a magmatic iron-vanadium-titanium deposit, which, interestingly, also has some PGMs. This is a near-term producer in a geological terrain similar to that which has been proven around the world. That’s a pretty interesting combination. And Brazil has a very well-developed mining sector, which means it also has pretty well-developed infrastructure, which adds to the economic viability of the project.

TMR: What about Energizer Resources Inc. (EGZ:TSX.V; ENZR:OTCQX) and its vanadium project in Madagascar, just east of South Africa in the Indian Ocean?

DF: Energizer’s Manga Vanadium project is a different type of deposit, but the grade and size look like they would be comparable economically. The biggest question there is the economics of the infrastructure, and we haven’t seen the scale of development yet that would give us a complete indication of what that’s going to look like. But, certainly, if that aspect of the project can be managed, Energizer could be a very viable source of vanadium supply.

TMR: What about alternative sources of manganese?

DF: None of the alternative areas are as proven as South Africa. That doesn’t mean they won’t work, but it means we don’t have a full understanding of what their production economics would look like. I would probably lean more toward Guyana and Reunion Gold Corp. (RGD:TSX.V), as the geology is similar to South Africa’s, and the costs are quite a bit lower than in North America.

TMR: Do you believe that the U.S., Canada and other western countries need to further the development of home-grown strategic minerals so that high-tech and emerging technologies are not so dependent on countries such as South Africa, China and the Democratic Republic of the Congo (DRC)?

DF: I think the market actually does a pretty good job of ensuring supplies of strategic metals. We may get short-term dislocations, but as an investor in mining companies, I would rather see higher prices for metals that are in short supply benefit companies that are developing the best new projects in the world. What tends to happen when you declare something “strategic” is that governments invest money in projects that are often very marginal. So you tend to reward people who are not developing the best projects in the world. I’d rather see capital go where we’re going to get the most supply, rather than to projects that will shuffle along for a couple of years and then shut down.

TMR: Mineral production everywhere is afflicted with rapidly rising costs. Do you think that anything can be done about this?

DF: For a while, the fad was to invest in sectors like mining. So we had a lot of often indiscriminate investment, a lot of capital going to a large variety of projects, some good, some not so good. All that new money bid up prices for mining services pretty significantly. What should happen and what is starting to happen now is that the less well-conceived projects are dying off, being put on hold or just not being developed. That’s easing some of the cost pressure. I think if we get back to developing only the best projects, only the projects that make sense, we will see less money being spent on services, and we’ll see less cost pressure, which would be good for the people left to develop the best projects.

TMR: If the production prices of industrial commodities can’t be controlled, doesn’t this suggest a possible significant decrease in production, which would have significant consequences economically?

DF: Yes, and we might be at that juncture right now. Look at the gold sector. We went from a focus on rapid expansion a few years ago to the reverse, which we’re seeing now. Investors are now asking companies to end their development capital spending, rationalize existing operations and focus on cash-flow projects.

That will probably translate into a smaller gold development pipeline, which means less gold being taken out of the ground for the next couple of years. That should stabilize prices and stabilize the industry.

TMR: Dave, thank you for your time and insights.

Dave Forest is chief operating officer of Condoto Platinum NL and managing geologist of Pierce Points, a free weekly e-letter covering the natural resource sector and commodities markets. A geologist, he has worked for over a decade in the oil and gas, mining, and environmental sectors.

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DISCLOSURE:

1) Kevin Michael Grace conducted this interview for The Metals Report and provides services to The Metals Report as an independent contractor. He or his family own shares of the following companies mentioned in this interview: None.

2) The following companies mentioned in the interview are sponsors of The Metals Report: Energizer Resources Inc. Streetwise Reports does not accept stock in exchange for its services or as sponsorship payment.

3) Dave Forest: I or my family own shares of the following companies mentioned in this interview: None. I personally am or my family is paid by the following companies mentioned in this interview: None. My company has a financial relationship with the following companies mentioned in this interview: None. I was not paid by Streetwise Reports for participating in this interview. Comments and opinions expressed are my own comments and opinions. I had the opportunity to review the interview for accuracy as of the date of the interview and am responsible for the content of the interview.

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By www.CentralBankNews.info     Kenya’s central bank held its central bank rate (CBR) steady at 8.50 percent, with no demand-driven inflation pressures though there are risks to the economic outlook from global events along with the high current account deficit that remain a threat to macroeconomic stability.
    In addition, the Central Bank of Kenya (CBK) said the implementation of new VAT measures from this month will contribute to a short-term increase in inflation but the effects will be mild.
    The CBK, which has cut rates by 250 basis points this year after cutting by 700 points in 2012, said a rise in inflation in August to 6.67 percent from 6.02 percent in July was largely due to an increase in fuel and some food prices along with the base effect from notable declines in 2012.
    Despite the rise, inflation is within the government’s target band of 5.0 percent, plus/minus 2.5 percentage points. Non-food-non-fuel inflation, which measures the impact of monetary policy, eased to 3.86 percent in August from 4.04 percent, reflecting reduced demand pressures in the economy.
    “These developments, coupled with non-inflationary private sector credit growth continued to support a stable short-term outlook for inflation,” the CBK said.

    The exchange rate of Kenya’s shilling also remained stable since the bank’s last meeting in July with the level of usable foreign exchange reserves at US$ 5.75 billion at the end of August, the equivalent of 4.1 months of import cover.
    The exchange rate fluctuated within a narrow range of 87.37 shilling to 87.70 to the U.S. dollar in July and ongoing initiatives by the government to attract foreign investors and expand the trade markets would support exchange rate stability through increased foreign exchange earnings in the future, the CBK said.
    Kenya’s current account deficit has kept the currency under pressure but the central bank has argued that a weaker shilling can help boost the economy’s international competitiveness.

     www.CentralBankNews.info

By The Sizemore Letter

As their share prices have gotten pummeled over the Bernanke “taper scare,” I’ve become increasingly bullish on REITs.  As I’ve written in recent weeks, I believe this is an excellent time to accumulate shares of high-quality “buy and forget” triple-net equity REITs.  But I also think it’s an excellent time to take a position in their more speculative cousins, mortgage REITs.

I’m not alone on this view.  The company insiders would appear to agree.

A company’s management and directors can sell their company’s stock for any number of reasons.  Perhaps they executed stock options or want to diversify their portfolio…or maybe their kids’ college tuition bill came due.  Unless the selling is widespread among several insiders, it’s hard to draw firm conclusions about insider selling.

Insider buying is a very different story, however.  There is only one reason why a company insider would buy their own stock on the open market: they consider it a good investment.

Trading on material non-public information is illegal, of course.  But there is nothing illegal about a company director using their knowledge of the business and their feelings about its prospects to make an informed purchase.  And by following their SEC filings, we can do the same.

I’ll start with American Realty Capital Properties (ARCP), a triple-net retail REIT I hold in my Dividend Growth Portfolio.  In the month of August alone, six company officers bought nearly $3 million in stock between them.  Their average price?  $13.73.  At today’s prices, you can pick of ARCP’s shares for less than what the insiders paid and enjoy a solid 6.7% dividend yield.

Let’s also take a look at the recent insider trading activity at Annaly Capital (NLY), the largest and most popular mortgage REIT. Chairman and CEO Wellington Denahan-Norris spent $2 million of her own money buying shares in August.  Three other company officers made significant purchases in the month of August as well.

The usual caveats apply here.  You should always do your own research and you should never blindly follow another investor—even a company insider.  But watching the trading moves of company insiders can provide useful insight when you’re contemplating a contrarian value trade.

Disclosures: Sizemore Capital is long ARCP. This article first appeared on TraderPlanet.

Charles Lewis Sizemore, CFA, is the editor of the Sizemore Investment Letter and the chief investment officer of investments firm Sizemore Capital Management. As of this writing, he was long ARCP. Click here to learn about his top 5 global investing trends and get your copy of “The Top 5 Million Dollar Trends of 2013.”

This article first appeared on Sizemore Insights as Two REITs with Insider Buying

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By OilPrice.com

On 17 July, Nicaragua announced that US-based Noble Energy would invest $30 million in drilling two offshore wells in the Caribbean—launching Nicaragua’s first-ever oil exploration. The wells will be drilled in the Tyra and Isabel blocks, which have undergone nearly 5,000 kilometers of seismic surveying since 2011. But Nicaragua’s first exploration will not go off without a hitch—namely, the revival of a nasty territorial dispute with Colombia, and another with Costa Rica.

In all Nicaragua is planning to offer up nearly 68,500 square kilometers of offshore Caribbean territory to explorers, dividing the area up into over 150 blocks.

This brings us to Noble Energy, one of our favorites over the past couple of years, but a company whose exploration bravado could land it in hot water—so we keep a close eye on developments. But here it’s all about who you know and who your friends are—and Noble’s got big friends in high places.

Noble Energy has minimal presence in Latin America, although aside from the Nicaraguan Caribbean, they purchased large areas for potential hydrocarbon exploration off the (also disputed) Falkland Islands (or Islas Malvinas, depending on your audience). Noble has built its company, in part, by drilling in unconventional corners of the globe, and the disputed waters between Colombia and Nicaragua are just such a niche.

Although Noble Energy is forging ahead with plans to drill for oil in Nicaraguan water, for most companies the potential downside of raising Colombia’s rankles outweighs the potential upside of a contract in Nicaragua.

Even before the International Court of Justice (ICJ) handed down a decision in late 2012 awarding the maritime territory to Nicaragua, Noble was preparing to get to work there. But Colombia is fighting to reverse the ICJ decision. This is a huge potential problem for outside investors with operations there and contracts with Nicaragua. Even if the bloc stays under Nicaraguan control, Colombia’s energy sector dwarfs Nicaragua’s, and drilling in the disputed area is almost certain to make Noble, and any other company working there, persona non grata in Bogotá.

Still, Noble is counting on projections that an investment of $335 million for at least five productive drills will yield 500 million barrels during the 20 to 30 year contract. They have the backing of one key man who has outlasted many and upset many predictions: Nicaraguan President Daniel Ortega, who will see revenues of up to $700 million a year if Noble’s projections are accurate.

Last week, tensions picked up momentum when Nicaragua’s promise became more than a threat—it became reality—when Noble’s Ocean Saratoga began drilling its first offshore exploration well. The well is being drilled 168 kilometers offshore from the Nicaraguan Caribbean coastal town of Bluefields. The first well will be drilled to a depth of 3,358 meters and exploration will be conducted over the next three months.

This is where Costa Rica comes in. Costa Rica, like Colombia, has its own claims. Specifically, Costa Rica claims maritime territory consisting of 18 blocks in the Pacific and 55 blocks in the Caribbean being offered up to explorers by Nicaragua.

Colombia’s Response

Noble’s endeavor has prompted Colombia to warn that it will under no circumstances allow oil exploration in the disputed territory. The Colombian president has also noted that its discretion on the issue for now should not be interpreted as inaction.

From Colombia’s perspective, this disputed area of the Caribbean sits in a UNESCO-sanctioned biosphere, Seaflower—home to a huge coral reef that should not be an oil-drilling target. A significant number of the blocks being offered up by Nicaragua for drilling are in this area. Also raising Colombia’s ire are the blocks located near the Colombian island of Quitasueno.

It gets even trickier when you consider that Colombia has controlled this territory since it gained independence in 1819—thanks to a number of treaties. However, those treaties—most recently one from 1928—are irrelevant, says Nicaragua, which claims that it was only signed under the pressure of US occupation. The ICJ rocked the boat on this late last year, ruling that Colombia has the right to seven islands in the territory but that Nicaragua should have the right to 70,000 square kilometers more than it was granted under those old treaties. Colombia is now challenging this legal assumption to the best of its ability. But the legal battle will extend further now that Nicaragua is seeking even more than the 70,000 square kilometers the ICJ thinks it should have.

Conclusion

Noble’s got its diplomatic work cut out for it, but its relying on full support from Ortega to deal with these territorial disputes. But there’s additional risk on this one as well. Nicaragua is uncharted territory, and the company itself notes only a 25% chance of success with its first well. This is just the test-run, intended to gather information for Noble’s Caribbean coast drilling ambitions, for which it plans to invest anywhere between $90 million and $335 million over the next six years, depending on how successful this first well is.

But Noble is opening up a Pandora’s Box here—much like it has in the Levant Basin with its wild exploration discovery of natural gas for Israel and a simmering dispute with Lebanon. So far, the company has managed to avoid getting entangled, but Nicaragua could be a legal headache—or worse. Where Noble is concerned, Colombia is the biggest problem, while the battle with Costa Rica is simmering faster on other grievances the country has with Nicaragua (and the US)—namely, ambitions to build a $40 billion Nicaragua Canal to rival the Panama Canal. Right now the most important thing to watch is the ICJ, which could be the kink in this chain.

By. Oil & Energy Insider Analysts of Oilprice.com

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London Gold Market Report
from Adrian Ash
BullionVault
Tues 3 Sept 09:05 EST

WHOLESALE London prices for physical gold jumped $15 from a drop to $1384 per ounce Tuesday morning, gaining after the Interfax news agency in Russia – political ally of Syria’s President Assad – reported two “objects” being fired in the Mediterranean, towards the sea’s eastern coast.

 The gold price then fell back only to rise and touch $1400 for the first time this week – 2.5% below last Wednesday’s 3-month high – as Israel confirmed the launch, saying it was done to test what Reuters calls a “US-funded” anti-missile system.

 “As long as Syria stays quiet, I would rather sell rallies [in the gold price] at the moment,” says David Govett at brokers Marex.

 But “we would also expect the metal to find support on pull backs,” says Walter de Wet at Standard Bank in London, “not only because Asian demand is likely to improve with gold below $1400, but also because geo-political risk around Syria remains high and oil prices elevated.

 “This may also keep ETF liquidation at bay.”

 Western investors sold exchange-traded gold funds heavily in the first half of 2013, leading gold ETFs to shed 650 tonnes of bullion.

 Holdings have since stabilized some 25% below end-2012’s record levels.

 Over in Asia and the Middle East notes Commerzbank’s commodity research team, “Physical gold buyers who had hugely stepped up their purchases after the price collapsed in the spring, appear to be acting opportunistically and with great price sensitivity.

 “In the wake of the latest price rise, it seems that they have withdrawn again,” says the German bank, pointing to August’s drop in US gold coin sales, plus today’s news of a 7-month low in Turkey’s gold bullion imports.

 Reviewing last week’s pop above $1430 per ounce as the UK and US debated immediate action against Syria’s Assad regime for an apparent chemical weapons attack on civilians, “If air strikes take place gold could well fall,” writes Jonathan Butler at Mitsubishi, “and if this takes place against a backdrop of QE tapering, the downwards correction could be sharp.”

 The US Federal Reserve is widely expected to announce a reduction of its $85 billion-per-month QE program at its policy meeting in two weeks’ time.

 Meantime, the gold price “should be well supported in the coming days,” says Butler. “But Friday’s US payroll data may be negative for gold, however.”

 Asian stock markets rose overnight, with Japan’s Nikkei adding 3% and the Shanghai index now regaining half of June’s 15% plunge after new data indicated lower new order for China’s manufacturers, but strong expecations for the future.

 European stock markets held flat overall. Both the Euro and Sterling slipped against the Dollar.

 Ten-year US Treasury yields rose to 2.84% as bond prices fell. Brent crude oil added 0.7% to rise above $115 per barrel.

 Silver bullion meantime rose further above $24 per ounce, reaching 4-session highs some 5.7% above Monday morning’s early low.

Adrian Ash

BullionVault

Gold price chart, no delay | Buy gold online

Adrian Ash is head of research at BullionVault, the secure, low-cost gold and silver market for private investors online, where you can buy gold and silver in Zurich or Singapore for just 0.5% commission.

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Please Note: This article is to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it.

The EURUSD Testing the Support at 1.3176

Yesterday the market activity was low due to the day off in the USA. The EURUSD was traded in a narrow range between the resistance at 1.3227 and support of 1.3185. Today the pair is under pressure and testing an important level at 1.3176 for the bulls. Moving averages and the Parabolic SAR expect the price decline, but it could be restricted by the 1.3147 level where the 10- day MA traversing. Overcoming of 1.3176—1.3147 will lead to drop down to 1.3070 and 1.3020. The bulls should recover the currency rate of the pair above 1.3263 to improve prospects.

The GBPUSD Holding Above the 55th Figure

Continuing decline in the EURGDP again supported the GBPUSD pair. A drop towards 1.5505 attracted buyers, and the pair rose to 1.5569, and soon to 1.5593. Here the pound came under pressure and fell to 1.5531. Until it is traded above the support at the 55th figure, the chances for continued growth remain, but the decline in the EURUSD will entail the GBPUSD, therefore, the loss of this support should not be excluded. In this case, the pair fall to 1.5462-1.5428. A drop below 1.5376 would be a negative sign for the bulls on the pound.

The USDCHF Continues Increase

Yesterday the dollar was traded with a positive sentiment. When it tested the support at 0.9307, the pair overcame the resistance at 0.9335 and increased to 0.9348. Now this level has been also punched. The dollar has tested the marker of 0.9371. Thus, the USDCHF is approaching to the August’s highs close to the 94th figure where the dollar was actively oversold. Consequently, the bulls should break through and consolidate above this level, then they can rely on further growth towards 0.9500-0.9533. The loss of support at 0.9307 will worsen prospects for the dollar.

The USDJPY Approaching to the 100th Figure

The USDJPY continues its growth, punched the resistance at 99.00 and increased to 99.70. The bears should forget about a downward correction, in any case, at this stage. There is a strong resistance at the 100-th figure on the bulls` way. If it punches, the growth of the dollar continues. In this case, the next target level for the bulls will be the 100.68 level. The level of 99.00 will act as a support, and a drop below will weaken the bulls` position.

provided by IAFT

By www.CentralBankNews.info     Uganda’s central bank raised its central bank rate (CBR) by 100 basis points to 12.0 percent, saying a “modest tightening of monetary policy should act to discourage economic agents from raising non food prices in response to the food price shocks and should counter any rise in inflation expectations.”
    The Bank of Uganda (BOU), which cut its rate by 100 basis points in June, quoted its governor, Emmanuel Tumusiime-Mutebile, as saying he expects the core inflation rate to remain above 6 percent for the next few months, but by tightening policy now, “I am confident that it will fall back towards our policy target of 5 percent by the third quarter of 2014.”
    Uganda is facing a supply side shock to agriculture that has raised food prices and may impede economic growth in 2013/14, the central bank said, with the risks to the outlook for core inflation over the next 12 months clearly rising.
    Headline inflation rose to 7.3 percent in August from 5.1 percent in July, driven by a 16 percent rise in food crop prices due to drought. Core inflation, however, remained relatively stable at 6.6 percent but the central bank said core inflation is likely to be pushed up because higher food prices affect items within the core inflation basket, such as maize and flour, and higher food prices also feed through to the general price level via cost-push effects and inflation expectations.

   Despite the worsening outlook for inflation, the central bank said it does not expect a repeat of the inflationary surge in 2011 because rapid bank credit growth and a large exchange rate depreciation do not pose the same effects in the current situation.
    “Nevertheless, it is prudent to ensure that any second round effects from the food supply shock on non food prices are contained, thereby limiting the upward pressure on core inflation, through a timely adjustment of monetary policy,” the bank said.
    The governor said he was fully aware of the potential impact of the rat rise on economic activity, however “it is my strong view that this is a necessary to anchor inflation expectations and to support economic growth over the medium to long term.”
    The central bank’s band around the central bank rate will remain at plus/minus two percentage points and the margin on the rediscount rate will be three percentage points. The rediscount rate will be 15 percent and the bank rate 16 percent.

    www.CentralBankNews.info

By HY Markets Forex Blog

West Texas Intermediate futures continued to fall on Tuesday as it set to extend its decline to a fourth session, while investors worries over the pending military strike against Syria eased. Brent dropped lower significantly after driven by the data’s from European factories outputs showing greater appetite for oil.

WTI October deliveries dropped 0.63% to $106.98 a barrel in New York’s Nymex  at the time of writing, while Brent crude futures traded flat in London, edging up 0.03% to $114.37 a barrel.

North American light crude benchmark dropped $1.06 a barrel, while Brent gained $0.32 in the previous session, with assistance from the better-than-expected European factory data.

Crude Futures – Syria delayed

Crude futures was at its third month of weekly gains as the situation in Syria eased after the US President Barack Obama said he will wait for the approval from the  Congress before proceeding with any military action against Syria. The operation is expected to be postponed until September 9. Meanwhile, France has said it would wait for the US decision.

Crude Futures – Positive factory data

With the positive manufacturing PMI data from both Europe and China, the global outlook was boosted at the same time. The positive manufacturing PMI data showed that a possible raise in crude demand in the future may occur with Markit’s euro data manufacturing Purchasing Manager’s Index (PMI) boosted, with a growth of 51.4 points in August, up from 50.3 in the previous month. While the European benchmark Brent crude was affected by the news, still rising above the $114 threshold.

Data released earlier this week confirmed that factories in China surpassed analysts’ forecasts, as the official PMI rose to a 16-month high of 51.0 points. On Tuesday, official non-manufacturing PMI showed a decline from July’s 54.3 to %3.9 points in August.

Meanwhile, investors worries over the supply jitters shuddering the oil markets in oil-rich Libya, Africa’s largest oil reserves, according to US Energy Information Administration data.

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Written by www.ew-forecast.com
EURUSD is trading nicely lower for the last week or so which could be start of a new larger impulsive bearish trend. However, decline from 1.3450 is actually still in three waves so corrective outlook must not be ignored but we will stay with current sentiment and focus on the bearish scenario as long as 1.3400 holds. Ideally market is now in the middle of an impulsive wave 3, and broken support channel line (blue circled zone on 4h chart) is important evidence for this count, because this breakout usually causes an acceleration that makes wave three the longest and sharpest wave. Downside projections for wave 3 are at 1.3130 and 1.3040.
EURUSD 4h Elliott Wave Analysis

On a daily chart we can see that EURUSD has been in uptrend mode almost all summer from 1.2750, but recovery has a corrective look. With that said, we think that move is complex correction, probably a flat and that larger trend will continue lower, especially if we consider a five wave decline from 1.3700 at the start of the year. Keep in mind that impulses show direction of a larger trend, which in our case it means down. If we are correct then latest bullish leg represents wave C) of a three wave pull-back that is already showing some evidences of a top at 1.3450. We however still need a larger impulsive weakness towards 1.3000 to confirm the end point of wave (2). If pair can do that, then EURUSD will be ready for a sharp fall in the rest of the year, probably to 1.2500 if not lower.
EURUSD Daily Elliott Wave Analysis

On a weekly chart we are also tracking a huge head and shoulder pattern where right shoulder could already be finished, so weakness is expected towards the neckline.
EURUSD Weekly Head & Shoulder Pattern

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By HY Markets Forex Blog

Major Asian stocks were seen in green on Tuesday, driven by the positive manufacturing data from Europe and China, along with the Markit’s euro area manufacturing Purchasing Manager’s Index (PMI) boosted to 51.4 points in August. While the Official PMI rose to a 16-month high of 51.0 points from previous reading of 50.3 points in July.

The Japanese yen was weakened to a one-month low against the greenback, boosting the country’s stock and driven by the upbeat data which shows that the global economy is recovering and stabilizing. The yen was traded 0.13% lower at ¥99.45 at the time of writing.

Japan’s benchmark Nikkei 225 advanced on Tuesday, edging 2.99% higher to 13,978.44 points and reaching a three-week high during the session.

The Bank of Japan (BoJ) announced that the country’s monetary base rose from previous record of 38% in July to 42% in August, exceeding analysts forecast of 41.3%. Japan’s spending signified above-forecast figures as it was recorded flat in the second-quarter.

A separate report released from the Japanese Ministry of Health, Welfare and Labour revealed that Japan’s average cash earnings increased 0.4%.

Exporters were driven by the country’s weaker yen, with Honda Motors, Japan’s second-largest automobile manufacturers edging 1.8% higher and Toyota Motor gained 3% during the day. Mitsubishi Motors, the sixth biggest automaker in the country, soared 7.5% higher.

Tokyo’s broader Topix index surged a massive 2.81% to 1,149.18 points.

Asian Stocks – China Positive Data

Gains were seen during the session in China , with Hong Kong’s Hang Seng rose 0.88% higher to 22,371 points and the Chinese mainland Shanghai index advanced 1.18% to 2123.10 points.

Chinese companies were driven by the upbeat manufacturing data, suggesting that the country’s economy is recovering at a faster pace.

The official non-manufacturing PMI for August declined from July’s 54.3 points to 53.9 in August, according to reports from the National Bureau of Statistics.

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