Equities soft after a recovery in the yen points to risk trades being trimmed and gold bounces back above ,250
FOREX -Euro hits six-week peak on banking deal view; dollar falls
NEW YORK (Reuters) – The euro rose to a six-week high against the dollar on Tuesday, helped by expectations of a banking deal in the euro zone and a growing view that the Federal Reserve would need additional positive data before it can decide to …
Forex – Euro rises to fresh highs vs. dollar, yen
Forex – Pound at session highs vs. dollar
Dollar Mixed As Taper Talk Dominates Market and Other Top Forex News.
For the lack of any market moving news and events, attention to turned to what the FED might or might not do next week. There was plenty of talk all over the media about possible tapering of the stimulus during the policy meeting next week. All this talk was based on a remark by James Bullard, something along the line that “chances of slowing the bond-buying program have risen”. Hardly a definitive statement or even a strong suggestion about a scope and timing of this action. Still, that was enough for the pundits to keep talking about all day, insinuating how good that should be for the USD, which is likely to stronger. Markets, though, seemed to ignore it, as the Dollar lost some ground again versus most of the majors, even if not by much. In spite of bold headlines, volatility was low, as if market participants were waiting for news from the FED rather than wild guesses of “experts”. In the last post I discussed shorting the EUR-USD during early trading on Monday, based on the 1H chart. I was looking for a strong bearish reversal candlestick pattern and eventually a good size shooting star did form. The trade was entered at 1.3719, targeting about 40 pips. Unfortunately, this pair kept on moving higher and this position did not work out as planned. On the positive note, the risk was small and in the end, the loss was only 15 pips. I
It is time to bring up the GBP-JPY chart again. Here the price has been moving higher in the past few days, creating a divergence with the MACD indicator on the intermediate-term chart. I am considering a trade on the short side if a convincing bearish candlestick develops. There is a relatively short window of opportunity for this to happen. If this set up does not develop in the next 24 hours or so, the MACD reading is likely to exceed its previous high, thus invalidating the divergence. Should the trade materialize, my objective will be about 200 pips. Mike K.
Last Friday’s reaction to the NFP showed a failed bearish attempt in EUR/USD, which was followed by bullish continuation. This week, the market continued higher, and after consolidating to start the European session, the pair started to rally again during the US session. Price action is riding the 20 and
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Vale is planning to sell partial stakes in its coal, fertilizer and steel businesses to reduce its own costs and decrease capital spending in the years ahead. The company is planning to sell a 15-25% stake in its coal business that includes operations in Australia and Mozambique. It is looking to bring in partners at the holding level for its fertilizer division, as opposed to its previous efforts to get partners for individual fertilizer production projects. Finally, Vale is also planning to sell its minority stake in the ailing Brazilian steel plant CSA which is majority-owned by ThyssenKrupp. 
These decisions have come in view of the company deciding to focus on its core iron ore business. It recently unveiled its capital expenditure plans for 2014 and most of the amount budgeted for project execution has been dedicated to this business. Also, the quantum of targeted spending has been scaled down. This can be achieved only by scaling down spending commitments for non-core businesses. 
The Coal Business
In 2012, Vale produced more than 5 million tons of metallurgical coal and almost 2 million tons of thermal coal. The coal business accounts for around 2.3% of the company’s revenues. It has been facing challenging times due to low prices and revenue from the division has declined even as production has increased.
Its assets include the mines at Moatize in Mozambique and mines in Australia. The assets in Australia include a majority stake in the underground Carborough Downs mine, a 50% stake in Isaac Plains which is a joint venture with Sumitomo, a 61% stake in the Integra mine in New South Wales’ Hunter Valley, and undeveloped projects including the Belvedere project in Queensland. The value of the assets that comprise coal operations is around billion, most of which is accounted for by the Mozambican assets. Therefore a 25% stake sale could raise as much as billion for Vale.
Vale expects to invest around .83 billion in the coal business next year, mostly to expand operations at Moatize and complete the construction of major railway and port infrastructure in the Nacala corridor of Mozambique. It is targeting users and buyers of coal as joint venture partners and also hopes to sell about half of its 70% stake in the Nacala project which will cost it .4 billion otherwise. Bringing in buyers and users of coal as partners will not only allow Vale to get funding and cut its own capital commitments but also mitigate risks. 
The Fertilizer Business
Vale’s fertilizer business accounts for around 7% of its revenues and includes operations in Brazil and Peru as well as projects in Canada and Mozambique. The company also had a billion potash project in Argentina which it was forced to suspend due to rising project costs, rampant inflation and depreciating currency in Argentina. Vale has set aside just million for investing in new fertilizer projects next year. 
Despite challenging conditions in the coal and fertilizers businesses, the company is not targeting them for divestment and sees them as part of its long term core.
The Steel Business
The CSA plant, in which Vale owns a 26.9% stake, was built by the company along with ThyssenKrupp for billion. Vale’s investment amounted to billion. The plant has an annual production capacity of 5 million tons and started operating in 2010 but hasn’t turned profitable yet due to cost overruns and technical difficulties. The rising labor costs and strengthening Brazilian currency have made the plant unprofitable. ThyssenKrupp has already announced its intention to exit the venture. While Vale has announced its intention to sell its stake in the plant, it didn’t specify the conditions under which it would do so. It is likely that the company will first wait for steel prices to recover. 
Vale has announced a capital expenditure budget of .8 billion for 2014 and intends to focus on regaining lost ground in the iron ore business. This business accounts for nearly two-thirds of the company revenues. Vale has been losing share in the iron ore market; as opposed to a share of of 32% in 2007, it now accounts only for 25% of the total market.
To achieve its goal, Vale intends to expand its iron ore production capacity from 306 million tons in 2013 to 450 million tons in 2018. The key to reaching this target is its Serra Sul project in Brazil, which has a price tag of .5 billion. At the same time, with prices of commodities falling across the board, Vale’s cash flows are likely to be constrained. Therefore, in order to finance such mega projects, cuts have to be made elsewhere and some non-core businesses need to be hived off to generate additional funds.
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WASHINGTON (MarketWatch) — Job openings at U.S. workplaces rose to 3.93 million in October from 3.88 million in September, the U.S. Department of Labor reported Tuesday. Compared with same period in the prior year, October’s job openings rose 7.7%, as private openings increased 7.8% to 3.55 million, and government openings rose to 373,000 from 350,000. With 11.27 million unemployed people in October, there were about 2.9 potential job seekers per opening, just about matching September’s result. In October 2012, there were 12.25 million unemployed people — about 3.4 potential seekers per opening. When the recession began in December 2007, there were less than two potential job seekers per opening. The number of separations, such as quits and layoffs, fell to 4.25 million in October from 4.48 million in September. Meanwhile, the total number of hires declined to 4.51 million in October from 4.63 million in September. The level of hires was almost 5 million when the recession began.
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